Key Points:
- Treasury prices fell for the first time in a month.
- The Supreme Court struck down Trump’s tariffs, threatening revenue.
- Strong inflation data suggests the Fed will delay rate cuts.
- Investors are selling bonds, expecting yields to rise further.
The mood in the massive thirty-one trillion dollar US Treasury market shifted sharply last week. After a strong month of gains, bond prices fell as investors reacted to a storm of negative news. A major Supreme Court ruling against President Donald Trump, combined with stubborn inflation numbers, convinced traders that the recent rally is over.
The Supreme Court decision to strike down Trump’s sweeping global tariffs created immediate financial uncertainty. These tariffs provided significant revenue for the government. Without that income, the Treasury might need to sell more debt to pay its bills. While Trump quickly announced plans for a new fifteen percent tariff using different laws, the market remains nervous about the growing deficit.
Economic data also forced investors to rethink their plans. Inflation remains higher than hoped, and the job market is surprisingly tough. Minutes from the Federal Reserve’s January meeting showed that officials are in no rush to cut interest rates. In fact, some policymakers suggested they might need to raise rates if prices keep climbing. This crushed the hopes of traders who bet heavily on rate cuts happening soon.
Big investors are already adjusting their portfolios. James Athey, a portfolio manager at Marlborough Investment Management, said he sold ten-year notes when yields dropped near four percent. He believes the market went too far, too fast. Yields ended the week higher at roughly 4.08 percent.
Global tensions are adding another layer of complexity. The US military is building up forces in the Middle East to pressure Iran, which has pushed oil prices higher. While geopolitical fear usually drives people to buy safe bonds, the threat of inflation from expensive oil is keeping buyers away.
Major banks like JPMorgan Chase are now advising clients to bet against short-term bonds. They argue that a stable economy means the Federal Reserve will likely keep interest rates high throughout 2026. For now, the momentum belongs to the bears, and the path of least resistance for bond prices appears to be down.
