Is the government bond market entering a "new order"? Trump's policy changes are pushing up long-term US bond risk premiums.

The "sell-off of US Treasuries" wave that swept through the global bond market this month is impacting the foundation of the US long-term Treasury bonds, the world's largest deficit financing tool. As the 100-day mark of President Trump's administration approaches, his trade war, tax policies, and unpredictable governing style are forcing bond investors to reevaluate the traditional safe-haven attributes of US Treasuries. In response to this, Jack McIntyre, who steers $63 billion in assets at Brandywine Global Investment Management, bluntly stated, "We are stepping into the Shanghai New World order." Even though Trump has shown policy fluctuations on tariffs, the uncertainty he has created has pushed the long-term US bond yields to their highest level since 2014. This change is particularly evident in the 30-year US Treasury bond yields -- the inflation-adjusted real yields reached their peak this month, despite some recent declines, they are still higher than the levels when Trump announced his plan to impose tariffs on April 2nd. It is understood that bond traders currently need to track three major policy variables: the combined impact of trade protectionism and tax policies on fragile economic growth; whether Trump will threaten to dismiss Federal Reserve Chairman Powell again; and whether the White House will use dollar devaluation to shift debt pressures. Although J.P. Morgan Asset Management still believes that US Treasuries are more attractive relative to eurozone bonds, and the auction results of 30-year US bonds this month show that market demand has not collapsed, institutional positioning strategies have clearly become more differentiated. PIMCO compared the softening trend of the US dollar, US stock market, and US Treasuries this month to a possible trend in emerging markets. The company has been buying US Treasuries but is also limiting the volatility of the yield curve, favoring bonds with maturities of 5 to 10 years. In contrast, Vanguard Group believes that there is further room for additional insurance in long-term bonds, especially if the federal deficit expands and leads to an increase in bond issuance. On the other hand, BlackRock's concerns about the deteriorating financial situation after the pandemic earlier this month, combined with the widespread decline in various US assets, highlighted the sensitivity of US Treasury bonds to changes in investor confidence. This selling in the US market shows that people are seeking more risk compensation and has become a focal point for people's concerns about the fragile balance. The latest financing plan from the US Treasury Department, to be released on Wednesday, will be a key test of market confidence. Wall Street expects high levels of Treasury auctions in the next three months, but the debate within the Republican Party over how to pay for tax cuts may once again raise concerns about fiscal sustainability in the market. It is worth noting that with every 1 percentage point increase in yield, it means the US government must pay hundreds of billions of dollars more in interest each year -- at a time when annual debt servicing costs are approaching the trillion-dollar mark, this is no small amount. In terms of the trend of yield spreads, institutions are divided into two camps: George Castranova, fixed income head at DWS Americas, believes that once the trade policy becomes clearer, the spread will decrease but it will be difficult to return to the lows of the past decade; while Vanguard Group, managing $10 trillion in assets, emphasizes that with economic growth expectations revised down to 1% (the lowest since 2020), fiscal risks will continue to push up the risk pricing of long-term bonds. This crisis of trust in US Treasuries caused by policy uncertainty is forcing the world's largest asset management institutions to recalibrate their investment logic. As the halo of safe-haven assets gradually fades, the US Treasury market may undergo a fundamental shift in pricing logic.