Bonds Rally as Investors Seek Safety From Tariff TurmoilUpdate

By Emese Bartha

Global government bonds jumped in the aftermath of U.S. President Trump's tariff announcements, extending their rise as China retaliated by announcing 34% tariffs on U.S. goods.

The 10-year Treasury yield dropped to its lowest in six months at 3.867%, having slipped below 4% in overnight trade. It last traded 13 basis points lower at 3.929%, according to Tradeweb.

European bonds took their cues from Treasurys, with yields falling both inside and outside the eurozone.

The German 10-year Bund yield fell to a one-month low of 2.484%, while the U.K. 10-year gilt yield hit a low of 4.381%, Tradeweb data showed. Both were down well over 10 basis points on the day.

"The big concern is that this is a sign of a sharp escalation of the tariff war, which will have major implications for the global economy," Hargreaves Lansdown's head of money and markets Susannah Streeter said in a note.

A beat in U.S. payrolls data, with 228,000 additions in March against 140,000 expected in The Wall Street Journal's poll, has brought little relief.

The U.S. tariff announcements on Wednesday brought some clarity but not an all-clear as trade negotiations continue and uncertainty itself might already be enough to weigh on sentiment, ING Research's senior rates strategist Benjamin Schroeder said in a note.

The U.S. tariffs were more aggressive than feared, raising recession fears among investors but also prompting concerns that inflation will take longer to fall back to central banks' targets.

"There is a sense that now the U.S. tariff announcements are behind us, so as newsflow settles, we may hope that market volatility may abate," BlueBay Asset Management's Chief Investment Officer Mark Dowding said in a note.

"Once this appears to be the case, we may have attractive entry levels to add to short rates positions, in anticipation that central banks will push back against market expectations of forthcoming monetary easing," he said.

Generali Investments shares the view that peak uncertainty is probably behind us, even as uncertainty will remain strong.

"We see euro area yields bottoming by the summer, while U.S. Treasury [yields] may have further scope to decrease," said senior economist Paolo Zanghieri in a note.

Write to Emese Bartha at emese.bartha@wsj.com