Treasury yields decline after a rollercoaster week as traders digest surprise U.S. tariff exemptions

U.S. Treasury yields fell on April 14th as investors reacted to a surprise tariff exemption after a volatile week of trading in the bond market. The 10-year Treasury was down over 0.04% (over 4 bps) at 4.452%, and the 2-year Treasury note yield slipped 0.036% (over 3 bps) to 3.918%.

U.S. 10-year Treasury yields (US10Y) plummeted over 0.04% at 4.45% while the 2-year Treasury yields plunged 0.036% at 3.918% after posting their biggest weekly increase in more than two decades as Trump’s unpredictable tariff exemptions prompted global market dislocation and forced selling. 

The White House revealed late April 11th that the exemptions were made because Trump wanted to ensure that companies had time to move production to the U.S. However, the president later suggested on April 13th that the exemptions were not permanent.

U.S. Treasury yield has fluctuated over the past week due to tariff uncertainties

Treasurys have sold off sharply this week amid broad uncertainty about the fallout from President Trump’s tariffs. One concern is that the tariffs could lead to weaker foreign demand for U.S. debt.

— Ajay Bagga (@Ajay_Bagga) April 11, 2025

The yield on the U.S. 10-year Treasury jumped from 3.99% at the start of last week to 4.49% by Friday, April 11th, with its spread over the German 10-year bund widening by the most in a week since 1990. The 10-year Treasury yield, which fell sharply during the first week of April as fears of a possible recession intensified, was at 4.29% as of April 8th, up from 4.16% at the previous day’s close. The yield, which affects borrowing costs on all sorts of loans, notably mortgages, had fallen as low as 3.87% on April 7th, near its lowest levels since October.

On April 11th, the 10-year Treasury yield climbed 9 basis points (0.09%) higher to 4.486%, while the 2-year Treasury yield rose 12 bps (0.12%) to 3.97%, adding to the steep weekly rise and fall, as confusing trade moves by Trump caused investors to dump U.S. assets in favor of other global safe-havens. However, the head of U.S. rates strategy at TD Securities, Gennadiy Goldberg, said there was no direct evidence that foreign investors were dumping Treasury notes. Still, the fear alone was enough to move the market.

Seema Shah, the chief global strategist at Principal Asset Management, said that low financing costs appeared to be a key pillar of the Trump administration’s overall agenda, so the reversals in market trends and volatile Treasury yields were definitely causing notable concerns in the White House.

“Markets are very confidence-driven. Even the perception that foreign investors are trying to step away from Treasury markets can trigger pretty significant panic.”

– Gennadiy Goldberg

As of April 11th, the 10-year yield had also risen more than 50 basis points (0.5%) within the week after ending the previous week around 4%, marking one of the biggest surges on record. 

Eurozone bond yields also fluctuate sharply following tariff exemptions

Eurozone government bond yields rose today, April 14th, after falling last week on Friday, as a possible exclusion for Chinese electronics from high U.S. import tariffs eased fear about the negative impact of U.S. trade policies on the global economy. The U.S. exempted smartphones and computers from ‘reciprocal’ tariffs, providing a potential reprieve for major technology firms. 

Germany’s 10-year yield–the euro area’s benchmark–rose 4.5 bps (0.045%) to 2.57% after dropping 5.5 bps (0.055%) on April 11th, while its 2-year yield, which is more sensitive to market expectations for ECB policy rates, rose 4.5 bps (0.045%) to 1.80%. It hit 1.623% last week, its lowest since October 2023. Italian bonds outperformed their German peers, with the 10-year yield flat at 3.81% after S&P upgraded its rating of Italy’s long-term credit to ‘BBB+’ from ‘BBB’. The yield spread between Italian and German 10-year bond yields fell to 120 bps (1.2%).

Last week, Germany’s 10-year yield fell 5.5 bps to 2.56%. It reached 2.487% on Friday, its lowest since March 4th. At the beginning of last week, the German 2-year yield also dropped 6 bps (0.06%) to 1.80%, hitting 1.751% by Friday, April 11th, its lowest level since October 6, 2024. The yield gap between French and German bonds stood at 76 bps (0.76%).

Barclays head of rates strategy Rohan Khanna said Germany’s market had been ‘plagued by scarcity’ with negative net bond issuance for seven of the past ten years–when taking central bank purchases into account. He added that this fiscal awakening was a push further into collateral abundance with far-reaching consequences for Bunds and their place in the European government bond market. Germany’s shifting price dynamics have rippled across Europe and beyond because global bond investors expected to earn higher yields elsewhere if they could earn nearly 3% on German debt.

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