When Tariffs Go Awry: The 5% Treasury Yield Saga

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What to know:

  • The 30-year U.S. Treasury yield has galloped past the 5% mark, all thanks to the U.S. Court of International Trade deciding that tariffs are so last season. Meanwhile, the 10-year yield has decided to join the party at 4.50%, a sprightly increase of 10 basis points in just two days. 🎉
  • As if the U.S.–China relationship needed more drama, we now have a delightful halt on chip tech exports, a ban on Chinese student visas, and a gentle nudge for domestic chipmakers to sever ties. Who knew international relations could be so entertaining? 😏

In a plot twist worthy of a mediocre soap opera, U.S. Treasury yields are on the rise, with the 30-year yield bouncing back above 5% and the 10-year yield leaping to 4.50% after the U.S. Court of International Trade declared President Donald Trump’s beloved tariffs illegal. Apparently, Congress has the exclusive right to regulate trade, and the president’s emergency powers are not meant for imposing tariffs—who would have thought? 🤷‍♂️

The court’s ruling has tossed out the general 10% and reciprocal duties, but fear not, sector-specific tariffs on steel and autos remain untouched, like the last slice of cake at a party. The administration, in a fit of defiance, plans to appeal this ruling. 🍰

In the past two sessions, the 10-year yield has jumped from 4.40%, highlighting just how sensitive the bond market is to policy changes and geopolitical shenanigans. It’s like watching a soap opera unfold, but with more numbers and less romance. 📈

Despite the court’s ruling, the specter of macro uncertainty looms large. The Kobeissi Letter, which sounds like a fancy Italian restaurant, points out that U.S.-China tensions are far from being resolved. The U.S. has ordered domestic chip designers to stop selling to China, paused exports of critical chip software and jet-engine technologies, and is even revoking visas for Chinese students. It’s like a game of international chess, but with more at stake. ♟️

The Dollar Index (DXY), which measures the U.S. currency’s value against a basket of trade partners, has responded with a hearty climb to 100 from 98, as investors flock to the dollar like moths to a flame amid global uncertainty and rising yields. Meanwhile, both bitcoin and gold are in a holding pattern, suggesting that markets are bracing for the next major policy move or geopolitical surprise. Stay tuned, folks! 🎭

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2025-05-29 12:30