Treasury yields remain elevated as stocks waver

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.

---

Stocks appeared to be on a tentative path to recovery midway through Tuesday’s session (they later slumped), but US Treasurys were still on the rise. It’s hard to say exactly why, but we have some theories. 

Given the broader market selloff and increased fears of a recession, investors could be pulling out of bonds in favor of cash — either to hold or reinvest into equities. (Remember, Treasury prices and yields have an inverse relationship). 

We don’t know how much (or even if) foreign bond holders are selling. But it’s possible they’re pulling out of the market, potentially as retaliation against tariffs. In an escalating trade war, offloading bonds is a powerful weapon. 

The Treasury reports the data on a monthly basis with a roughly six-week lag, so we won’t get February’s figures until later this month. 

Japan has been the longtime top foreign holder of US Treasurys. As of January, the country had $1.08 billion in government bonds. China and the UK are the next largest holders, with holdings amounting to $761 billion and $740 billion, respectively, at the start of the year. 

The 10-year yield has been above 4% since Monday, hovering around 4.2% Tuesday afternoon. The one-year yield briefly hit 4% earlier in Tuesday’s session, but quickly fell back to around 3.9%.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• 0xResearch: Alpha directly in your inbox.
• Lightspeed: All things Solana.
• The Drop: Apps, games, memes and more.
• Supply Shock: Bitcoin, bitcoin, bitcoin.