US Treasuries were a safe haven for investors. What changed?

When the stock market plunges, investors usually take their money out of risky assets and put that cash into the "safe haven" of U.S. Treasury bonds. But something different is happening since President Donald Trump launched his "Liberation Day" trade war against the world: Investors are treating Treasuries like they are risky assets.

Investors around the world have usually considered Treasuries "so rock-solid safe they're risk-free," said Bloomberg. Trump's "all-out assault on global trade" has put that status in question. Investors are dumping 10- and 30-year Treasuries alongside "stocks, crypto and other risky assets." That's because Treasuries depend on America's reputation for fiscal and monetary "competence," said James Grant, the founder of Grant's Interest Rate Observer. The volatility of the bond market suggests the "world is reconsidering."

America's "global safe-haven status is in question," said J.P. Morgan Asset Management's Priya Misra to The New York Times. That questioning raised alarms in the White House: Trump pointed to bond market skittishness as the reason he paused most of his previously announced tariffs. That did not stop the damage. America is now "being treated by global financial markets like a problematic emerging market," said former U.S. Treasury Secretary Lawrence H. Summers.

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What did the commentators say?

"Welcome to the resistance, bond traders," said Ryan Teague Beckwith at MSNBC. Those traders helped force Trump to "back down from imposing a disastrous set of tariffs on almost every country in the world." When the stock market fell following Trump's tariff announcement, investors should have fled to Treasuries. "But that didn't happen." It's alarming, one Financial Times journalist said, when the "ultimate safe port in a storm is suffering from its own tempest." The result, Beckwith added, is that the bond market inadvertently acted as "checks and balances" on Trump when nobody else would.

Continuing instability in the bond markets still looks "extremely dangerous," said The Economist. Those problems are "not just a symptom of market stress — they are a cause of more to come." Trump's moves to restrict global trade have "dented confidence in American policymaking" and it is only natural that Treasuries, the way America issues its "sovereign debt," would also be seen as "less safe." That makes this moment "nervous times for investors, policymakers and just about every American."

What next?

Bond turbulence is not just bad for investors. The Treasury must pay out higher yields to attract investors. Those higher yields "mean higher costs for companies to borrow," analyst Laith Khalaf said to BBC News, "and of course governments too." That will affect both inflation and government budgeting.

Jamie Dimon, the CEO of JPMorgan Chase, is trying to buck up the bond markets, said Yahoo Finance. America's "considerable turbulence" does not "take away the fact that if you're going to invest your money in something, America is still a pretty, pretty good place in this turbulent world," he said in a conference call with reporters. Others are not so sure. Bond market volatility should be a "worrying sign" about "confidence in investing in America," said MacroPolicy Perspectives' Julia Coronado to Politico.