U.S. Treasury yields surged on Wednesday, a sign that investors are selling their safest assets as the latest round of President Donald Trump‘s tariffs take effect.

Why It Matters

Trump’s announcement of sweeping tariffs on almost all U.S. trading partners on April 2—his so-called “Liberation Day”—sent global markets into a tailspin and raised the risk of a recession.

Treasury yields are often viewed as a benchmark for interest rates. When Treasury yields go up, the cost of borrowing generally increases for people, businesses and the government. Rising Treasury yields can also signal expectations of higher inflation.

What To Know

The 10-year U.S. Treasury yield was at 4.34 percent at around 3:50 a.m. EDT, while 30-year yield was at 4.82 percent.

Tahra Jirari, director of economic analysis at Chamber of Progress, called it a “bond market meltdown” when the 30-year yield soared above 5 percent shortly after midnight on Wednesday.

Jim Bianco, the president and macro strategist at Bianco Research, said that “something has broken tonight in the bond market. We are seeing a disorderly liquidation.”

The latest round of Trump’s tariffs kicked in after midnight Eastern time in the U.S., with higher tax rates on imports from dozens of countries and territories taking hold.

What People Are Saying

Tahra Jirari, director of economic analysis at Chamber of Progress, wrote on X early Wednesday: “30-year yield just blew past 5 percent. This is what a bond market meltdown looks like. Tariffs were never going to ‘revitalize’ our manufacturing, they’re just jacking up costs, tanking markets, and fast-tracking us into a recession. Economic malpractice in real time.”

Jim Bianco, the president and macro strategist at Bianco Research, wrote on X: “Something has broken tonight in the bond market. We are seeing a disorderly liquidation. If I had to GUESS, the basis trade is in full unwind. Since Friday’s close to now … the 30-year yield is up 56 bps, in three trading days. The last time this yield rose this much in 3 days (close to close) was January 7, 1982, when the yield was 14 percent. This kind of historic move is caused by a forced liquidation, not human managers make decisions about the outlook for rates at midnight ET.”

Julian Jessop, an independent economist, wrote on X: “Treasury yields are rebounding, so fans of Trump’s tariffs can’t even claim a lower cost of government borrowing as a benefit.”

Jessop added that “oddly, yields are rising even though markets are pricing in more cuts from the Fed; this anomaly probably reflects a mix of factors including persistent inflation concerns, forced sales of bonds to cover losses on basis trades (arbitraging between cash Treasuries and futures) or other assets, a shortage of foreign buyers, and investors choosing to bet on rate cuts in other ways (e.g. interest rate swaps).”

What Happens Next

More swings for financial markets are expected given uncertainty over how long Trump could keep the tariffs in effect. Economists expect a recession if they remain in effect for some time, but the worst could be avoided if they are lowered through negotiations relatively soon.