June 11

A once-in-50-year trade policy shock drove financial market turbulence in April. The U.S. dollar slipped lower, the stock market dipped to year-to-date lows before recovering, and 30-year U.S. Treasury bond yields experienced their largest weekly volatility in over 50 years, all driven by the unexpected breadth of proposed tariffs. Volatility prompted the U.S. to pause implementation after one week for negotiations, though China faced even steeper tariff rates. Unlike typical risk-off episodes, longer-maturity treasuries saw limited support—likely due to concerns over deglobalization and near-term deleveraging from hedge funds. As markets stabilized, U.S. Treasury yields declined over the remainder of the month, with a notable steepening of the yield curve. Beneath the relatively modest month-over-month changes were sharp intra-month swings exceeding 50 basis points in the 5-, 10-, and 30-year maturities. The yield on the 2-year US Treasury note fell 22 basis points (“bps”) to 3.60%. The yield on the benchmark 10-year Treasury fell to 4.16%, down from 4.21% at the end of March.