U.S. Treasury bonds have long been considered a reliable asset, especially during times of crisis. Their value grew even as America's credit rating declined. However, during Donald Trump's «trade wars», their stability began to raise doubts. Even if market volatility decreases, this signal shows that confidence in Treasury bonds is no longer evident.
Yields on long-term bonds have increased sharply in recent days, while the dollar has weakened. Investors actively sold 10- and 30-year securities, which reduced their value and increased profitability, simultaneously with the sale of stocks and cryptocurrencies. Sometimes bonds grew along with these assets, which is unusual for «safe» investments.
This change could have a major impact on the global financial system. As a benchmark for asset pricing and collateral for multi-trillion dollar loans, U.S. bonds are losing ground. Increased capital outflows, a decline in the dollar's reserve positions and the risk of recession increase the likelihood of a double-digit budget deficit, fueling inflation.
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