An analysis suggests that the rapid rise in yields in the U.S. government bond market significantly influenced President Donald Trump's decision to suspend new tariffs for 90 days on most countries. It is interpreted that the White House took policy action to calm market anxiety as U.S. government bonds, regarded as a safe asset in the global financial market, were swept up in a massive sell-off that caused yields to skyrocket.
On the 9th (local time), President Donald Trump abruptly announced that he would suspend the imposition of new tariffs on most countries, excluding China, for 90 days. The White House explained it as "a measure to create negotiation space," but immediately after the announcement, the yield on 10-year U.S. government bonds surged to 4.51%, marking a seven-week high, and the yield on 30-year bonds also briefly surpassed 5%.
Yields on government bonds move in the opposite direction to bond prices. Generally, when market anxiety rises, funds flock to U.S. government bonds, but this time a sell-off occurred, causing yields to rise sharply. Deutsche Bank assessed that "the market has lost confidence in U.S. assets," and Reuters reported that "the rise in yields this week is the largest since 2001."
There are reports that there were unusual signs in the bond market behind the policy decisions. According to CNN, Secretary of the Treasury Scott Basen reported the market situation directly to President Trump that morning, and concerns were raised within the White House that "the loss of confidence in the government bond market is spreading rapidly." President Trump told reporters, "The bond market is very tricky," and noted observing people's anxiety.
Anxiety in the government bond market is also affecting the real economy. The interest rate on U.S. mortgage loans has once again surpassed 7%, and corporate loan and government borrowing costs are also soaring. In this regard, Reuters warned that "if the confidence in the government bond market, which has been regarded as the foundation of U.S. finances, is shaken, it could impact the global financial system as a whole."
Political pressure has also influenced the Trump administration's decisions. The Washington Post likened it to "President Trump acting like King Knut trying to place a throne on the beach and stop the tide," analyzing that the White House chose to pivot its policies under pressure from falling market and approval ratings. In fact, President Trump's approval rating has dropped from 48% to 43% in the past two weeks, and there are warnings within the Republican Party that "if the tariff policy continues, it could hand the House of Representatives to the Democrats in the 2026 midterm elections."
There is also analysis that diplomatic conflicts with allies were a burden. President Trump expected cooperation with Japan, South Korea, and Taiwan but engaged in aggressive measures, such as imposing a high tariff of 46% on Vietnam, inadvertently leading to diplomatic isolation. China has used this opportunity to increase diplomatic contacts with Japan and South Korea, forming an anti-U.S. front.
After the announcement of the policy suspension, the New York stock market rebounded. The S&P 500 index rose by 9.5%, and the Nasdaq closed up by 12%, signaling temporary relief. However, market anxiety has not been fully resolved. The suspension measure is limited to July 8, and the trade conflict with China is still ongoing. CNN analyzed that "in a situation where market turmoil and political pressure are intertwined, President Trump ultimately had no choice but to pull the tariff suspension card."