Treasury Yields Rise as Trade War Tensions Intensify

Equities experienced a modest rebound while US Treasury markets raised concerns. The 10-year yield surpassed 4.51% coinciding with President Trump’s tariff on Chinese imports.

Main points include:

Possibility of foreign bond holders selling, contributing to yield spikes.
Hedge funds' Treasury basis trades may be unwinding, leading to massive selling.
Lower prices result in margin calls, prompting further selling and reduced liquidity.
Concerns arise over a potential deep recession linked to a growing deficit.
The Treasury's recent 10-year auction showed strong demand from indirect bidders, comprising 88% of accepted bids.
Direct bidders decreased by 45% compared to January.
Speculation exists around the causes of the Treasury selloff, with the next foreign holder data report expected next week.
Odds for an interest rate cut in May dropped to 38% from 45% previously.

Market participants remain vigilant as they await clarifications on these developments.