Trump Hails 'Beautiful' Bond Market After Tariff Pause, But Treasury Yields Offer No Clear Signal For Now

In an unexpected twist on Wednesday, Wall Street soared after President Donald Trump announced a 90-day pause on higher reciprocal tariffs for most countries — excluding China, which saw levies hiked to a whopping 125%. However, confidence in U.S. bonds did not exactly improve.

The Nasdaq marked its biggest single-day gain since 2001, while the S&P 500 posted its best day since October 2008.

The S&P's 531-point intraday swing — from a low of 4948 to a high of 5481 — was also a record. 

All 11 sectors closed higher, with gains ranging from 3.9% to 11.6%.

Trump also argued that the bond market was in a better position following his about-face, even as Treasury yields told a different story.

Speaking to the press outside the White House after his announcement, Trump said: "I was watching the bond market. It's very tricky. If you look at it now it's beautiful. The bond market right now is beautiful." 

"But I saw last night where people were getting a little queasy," he added.

On Wednesday, 2-year Treasury yields surged 18.8 basis points to 3.916% after briefly touching 4.01%, according to The Fly, as safe-haven demand eased and investors pulled back bets on a Federal Reserve rate cut.

The 10-year yield rose two basis points to 4.338% after hitting 4.51% earlier. The yield curve flattened, with the spread narrowing to 40 basis points from a high of 73.8 bps earlier in the day.

However, short- and long-term bond yields were dropping in Thursday's Asia trading hours.

Still, analysts and prominent Wall Street names have argued there is growing angst that the world is losing confidence in U.S. assets, and investors are shunning Treasuries, stocks, and the dollar as safe havens. 

Earlier this week, Goldman Sachs said China could dump U.S. Treasuries and devalue the yuan to counter U.S. tariff policies.

Media reports emerged that Treasury Secretary Scott Bessent raised concerns about the bond market selloff directly with Trump on Wednesday before the pause announcement.

However, several Wall Street analysts have not entirely ruled out the risk of an economic fallout, even as they slightly lowered the probability of recession.

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