Islamabad, Apr 11, 2025: Global stock markets faced a sharp decline, and the U.S. dollar experienced further weakening on Friday, as a frantic bond market selloff gripped investor.
This marked a turbulent conclusion to a week filled with escalating global trade tensions and reciprocal tariff hikes that fueled concerns about an imminent economic slowdown and shook investor faith in U.S. assets.
As anxiety spread, investors flocked to safer assets, driving the Swiss franc to a 10-year high against the dollar, and gold surged to a new record after a brief rally spurred by U.S. President Donald Trump’s decision to temporarily reduce tariffs on several nations.
The bond market turmoil continued during Asian trading hours, with the yield on the 10-year U.S. Treasury note reaching 4.475%, marking a rise of more than 40 basis points in just one week, the largest jump since 2001, according to LSEG data.
Market experts worldwide have pointed to this week’s dramatic sell-off in U.S. Treasuries and the dollar’s decline as signs that global confidence in the U.S. economy is waning.
“There is undoubtedly a flight from U.S. assets. A weakening currency and a falling bond market are concerning indicators,” noted Kyle Rodda, senior analyst at Capital.com. “This reflects more than just concerns over growth and trade uncertainty.”
In Asia, Japan’s Nikkei index dropped 4.5%, while South Korea’s stock market fell by 1.7%. MSCI’s broad index for Asia-Pacific stocks excluding Japan fell by 0.5%.
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U.S. futures for the S&P 500 and Nasdaq dropped by around 1% each after a sharp decline overnight.
“The immediate outlook for global risk assets remains uncertain, given concerns about growth, inflation, and fluctuating trade dynamics,” said Vasu Menon, managing director at OCBC Bank in Singapore.
Investors remain on edge over the intensifying trade conflict between the U.S. and China, following Trump’s decision to further raise tariffs on Chinese goods, pushing them close to 145%.
China responded by increasing tariffs on U.S. goods, with fears mounting that China might elevate duties even higher than the current 84%.
Chinese stocks had a muted start on Friday, with the CSI300 index falling 0.5% and Hong Kong’s Hang Seng dropping 0.38%.
James Athey, a fixed-income manager at Marlborough, said the market outlook is cloudier than it was just a month ago, citing numerous unresolved and unanswerable questions.
DOLLAR DECLINES IN VALUE
The U.S. dollar has been under heavy selling pressure in recent weeks, with traders seeking refuge in the Japanese yen, Swiss franc, and euro.
On Friday, the dollar reached its lowest point in 10 years against the Swiss franc and its lowest in six months against the yen.
The euro soared by 1.7%, reaching $1.13855, a level last seen in February 2022.
The dollar index, which tracks the currency against six major counterparts, dipped below 100 for the first time since July 2023.
The dollar’s decline provided some relief to emerging market currencies, such as the Malaysian ringgit.
Markets largely ignored data from the U.S. Labor Department, which showed that consumer prices unexpectedly fell in March.
However, inflationary improvements are unlikely to persist due to the ongoing tariff situation.
Meanwhile, the violent sell-off in U.S. Treasuries this week, reminiscent of the panic-driven market behavior during the COVID-19 crisis, reignited concerns about the vulnerability of the world’s largest bond market.
Thirty-year bond yields surged to 4.90%, on track for the most significant weekly increase since at least 1982, according to LSEG data.
In the commodities market, gold prices hit a historic high, rising 1.25% to $3,214 per ounce, as safe-haven demand surged.
Oil prices dropped in early Friday trading after a $2 per barrel decline the day before. U.S. West Texas Intermediate crude futures fell by 0.48%, while Brent crude futures saw a 0.46% drop.
