Long-end Treasuries continue to send warning signals

If you're looking to try and get a feel of the broader market anxiety, look no further than Treasuries. Long-end yields are starting to rise again and that will keep risk sentiment on edge as we look to settle into the week. As things stand, traders and investors are slowly losing confidence on any imminent trade deals and US assets are being punished hard.

As a reminder, it was the bond market that got Trump to blink with his tariffs pause. And after two weeks of going through the mess, we're in no better position to where we were back then. This was the situation when 30-year yields were at 4.90% on 10 April:

"As we know, it was the bond market - not the stock market - that got him to relent on his reciprocal tariffs position earlier this week.

And yet, Treasury yields are still surging as the market continues to kick and scream. So, what next?

We're essentially playing a game of chicken where someone between Trump, China, or the Fed has to blink first.

Considering their response to all this, you wouldn't want to bet on China to be the first to give in. That leaves only a battle between Trump and the Fed.

At this point in time, it's not an easy call. If Powell & co. do step in with emergency purchases of Treasuries, it will provide some short-term relief. However, the message that it sends is that it just enables Trump to stay on his tariffs crusade for longer. As for Trump backing down further, that's probably the best case scenario for markets - especially if he picks up the phone to call up Beijing."