The surge in Treasury selloff triggered by tariffs this week created disruptions in the largest bond market, leading to concerns about potential long-term implications for U.S. markets. Market participants observed widening bid-ask spreads during the orderly selloff, with some indicators reaching double their usual levels. While Treasury yields slightly retreated after President Trump's tariff pause announcement, they remained elevated, marking the largest weekly increase since 2001 amid volatile trading.

Investors and analysts compared this week's market movements to the chaotic events of March 2020, prompting the Federal Reserve to intervene with a substantial bond-buying program. Bill Campbell, a portfolio manager, highlighted the challenging trading conditions, especially as hedge funds unwound leverage-based trades, causing strain on banks' balance sheets.

Despite functioning as intended, some participants acknowledged heightened vigilance for signs of stress in the market, given its crucial role in the global financial system. Disruptions in the Treasuries market can pose financial stability risks and hinder policymakers’ actions, as soaring yields can significantly hike borrowing costs for governments. Trump, after expressing concern regarding the bond market, remarked that it was "beautiful" following the tariff pause.