The selling pressure on longer-term US Treasuries intensified, resulting in the most significant selloff since 2020 in what are typically considered the safest assets globally. Concerns about President Donald Trump's tariffs taking effect today causing an economic downturn and constraining the Federal Reserve's ability to counteract potential inflation led to the yield on 30-year Treasuries briefly breaching 5%. Although the selling subsided during European trading hours, speculations persisted about the factors driving investors away from US government debt.

Portfolio manager Calvin Yeoh described the situation as a "fire sale of Treasuries," noting unprecedented volatility reminiscent of the pandemic chaos. Over the last three trading sessions, the 30-year yield surged by approximately 40 basis points, the largest increase since November 2020. The rise in long-term yields has implications for various sectors, including mortgage and loan rates, impacting Treasury Secretary Scott Bessent's objective of lowering borrowing costs for consumers.

Traditionally regarded as a safe haven, US bonds have been pivotal in portfolio construction, with investors relying on America's stability and economic strength. The recent surge in yields may challenge this perception. The Treasury's upcoming auction of 10-year notes will be closely monitored as a barometer of market sentiment.

In global markets, European and Asian stocks plummeted, while S&P 500 futures remained relatively stable. The absence of an immediate response from China to the new US tariffs hinted at a potential easing in trade tensions. The dollar weakened, and Brent crude approached $60 per barrel.

Bond yields in various countries, including the UK, Australia, and Japan, experienced significant increases alongside US Treasury yields. The abrupt spike in Treasury yields drew considerable attention from traders, sparking theories about the underlying causes behind this unexpected movement.

Some traders attributed the unease to lackluster recent debt auctions and a broader sense of apprehension regarding potential hidden risks in the market. The intensity of the selloff raised concerns about foreign divestment from US debt and investors liquidating assets to raise capital swiftly.