US Treasuries are increasingly losing their reputation as safe havens in times of crisis, which represents a significant change for investors and savers. For a long time, US government bonds were seen as the epitome of financial stability and were preferred as a safe retreat in times of economic or geopolitical uncertainty. However, this trust is starting to erode.
Reasons for Loss of Confidence in US Treasuries
- Political Uncertainties: Turmoil in Washington, including escalating trade conflicts like Trump’s trade war, severely undermine investor confidence.
- Record-high National Debt: The rapidly increasing debt load of the United States raises doubts about the country’s long-term stability and creditworthiness.
- Changed Market Reactions: Instead of investing more capital in Treasuries during crises as before (which lowered yields), investors are now partly selling these bonds alongside riskier assets like stocks. This is also reflected in the sharp rise in yields, such as a jump of over 50 basis points in ten-year US bonds in early April 2025 – an unusual pattern since 2001.
Consequences and New Developments
- Bunds Gain Importance: German government bonds (Bunds) are increasingly taking on the role of a safe haven. Despite billion-dollar investment announcements, Bunds remain more stable than US Treasuries and are gaining rising trust among investors.
- Global Implications: The loss of confidence in US Treasuries potentially has far-reaching consequences for the global financial system, as many international portfolios have traditionally relied heavily on American government bonds. The shift towards European bonds is changing the dynamics in capital markets worldwide.
For investors, this change means a reassessment of their safety needs and investment strategies. The previous reliability of US government bonds as a crisis hedge is no longer given, which is why alternative safe investments like Bunds are coming into closer focus.
In summary, the lost confidence in US Treasuries marks a paradigm shift in global investment behavior – moving away from the American bond market towards other safe havens like German Bunds.