By Tom Westbrook, Rae Wee and Dhara Ranasinghe
(Reuters) -U.S. Treasury investors were left bruised on Wednesday despite a temporary pause in U.S. tariffs, as some funds were forced to sell bonds in a dash for cash while others called into question the bonds’ status as the world’s safest asset.
Yields on 10-year Treasury notes, which had jumped to a seven-week high, maintained higher levels after President Donald Trump said on Wednesday he authorized a 90-day pause for most of his new tariffs but was raising the tariff rate for China to 125%, effective immediately.
At different points during volatile trading, the run-up in yields so far this week topped the biggest weekly jump since 2001.
The dollar, also a traditional safe haven but which had weakened against other major currencies, rebounded, as did U.S. stocks, after Trump’s announcement.
Analysts and investors across the globe pointed to the sell-off in Treasuries this week as evidence that confidence in the world’s biggest economy has been shaken.
“The market has lost faith in U.S. assets,” Deutsche Bank analysts wrote in a research note earlier on Wednesday before Trump’s announcement.
Marc Rowan, CEO of Apollo Global Management, the massive alternative asset manager, said in a CNBC interview that he was worried about damage to the U.S. brand.
As U.S. trading got underway on Wednesday, some analysts said the situation had deteriorated in some corners of the market where investors had loaded up on debt.
Even so, three market sources said dislocations had not hit crisis levels and that trading, though volatile, had been orderly.
An afternoon auction of 10-year Treasury bonds, which had been a focus of the market, came in within market expectations. The auction results provided further relief to the market.
Even so, questions on the outlook remained.
“The 90-day suspension does allow nice breathing room to allow negotiation to settle in and market valuations have clearly been reset,” said Carol Schleif, chief market strategist at BMO private wealth. “Yet the uncertainty for companies remains.”
In the past, moves of this magnitude in global markets have tended to elicit a forceful response from major governments and central banks, with the United States leading the way.
On Wednesday, however, the world’s largest economy was absent from an announcement that Japan and Canada, which chairs the G7 developed economies, had agreed to cooperate to maintain stability in financial markets and the global financial system.
Before Trump’s tariffs announcement on Wednesday, Treasury Secretary Scott Bessent downplayed the market rout. In a morning interview with the Fox Business Network, he said he expected the bond market to calm down and had not seen anything systemic about the selloff so far.