Wall Street opened the week under heavy pressure as stocks slid sharply and a global bond sell-off pushed yields higher. The renewed volatility was sparked in part by escalating US–EU trade tensions after President Donald Trump threatened new tariffs on European allies unless they agreed to terms related to Greenland.

While equity markets absorbed the initial shock, it was the bond market’s reaction that carried the louder warning. Treasury yields climbed to their highest levels in four months, signaling that investors are no longer treating US assets as an automatic refuge during periods of uncertainty.

When Safe Havens Stop Acting Safe

Traditionally, US government bonds are seen as the ultimate safe haven — a place for capital to hide when geopolitical or economic risks rise. This time, however, the instability is originating from Washington itself. Instead of buying Treasuries, some investors are selling them, contributing to rising yields and reinforcing the sense that confidence in US policy direction is being tested.

The sell-off was compounded by weakness in Japanese government bonds, adding global pressure to rates. At the same time, the US dollar slid to a two-week low as investors leaned into what traders have dubbed the “debasement trade,” rotating toward assets seen as protection against policy-driven instability.

Greenland, Tariffs, and a Familiar Pattern

Over the weekend, Trump warned he would impose 10% tariffs on eight European countries unless they secured a deal allowing the US to acquire Greenland, with duties rising to 25% by June. European leaders quickly condemned the threats and signaled potential retaliation, reviving fears of a broader transatlantic trade conflict.

The episode echoes last spring’s “Liberation Day” turmoil, when aggressive trade rhetoric triggered sharp market sell-offs. While the current reaction has been less dramatic, it has reopened concerns that many investors believed were settled — particularly around the economic cost of renewed tariff wars.

In both cases, the bond market has acted as the clearest barometer of unease. Unlike stocks, which can sometimes shrug off policy noise, bonds tend to react swiftly to perceived threats to growth, inflation, and fiscal stability.

A Market That May Be Harder to Ignore

Analysts warn that the economic fallout could be meaningful if rhetoric turns into action. Economists at Oxford Economics estimate that if the US follows through with a 25% tariff and Europe retaliates in kind, US GDP could be reduced by about 1% relative to baseline expectations at peak impact, with a similar — though more prolonged — drag on the euro area.

The key question now is whether policymakers will heed the signal. Bond markets lack the daily headlines of stock indices, but their movements directly affect borrowing costs, mortgage rates, and government financing. Sustained rises in yields have a way of focusing attention in Washington.

Watching the Yields

If 2025 offered any lesson, it’s that bond investors can sometimes exert more influence than equity traders when policy risks escalate. As yields climb and confidence wavers, the message from fixed income markets is becoming harder to dismiss.

Whether that message alters the course of trade policy remains uncertain. But for now, the bond market is clearly speaking up again — and it may not stop until it’s heard.