NEW YORK — A fresh sell-off in U.S. government debt has intensified pressure on global markets, raising renewed questions about the dollar’s role as the world’s dominant safe-haven currency.
U.S. Treasury yields have climbed sharply in recent sessions as investors demand higher returns to hold American debt. The benchmark 10-year Treasury yield recently traded around 4.6 percent, while the 30-year yield touched about 5.20 percent, its highest level since 2007, according to Reuters. Bond yields rise when prices fall, meaning the move reflects heavy selling across long-term U.S. government debt.
The sell-off has been driven by a combination of stubborn inflation, stronger-than-expected economic data, rising borrowing needs and concern over the size of the U.S. fiscal deficit. Mortgage investors have also added to market pressure by hedging against rising yields, a process that can force additional selling of Treasuries and deepen volatility.
The turmoil has come at a sensitive moment for the dollar. Traditionally, investors turn to both U.S. Treasuries and the dollar during periods of global stress. But recent market behaviour has been more complicated, with Treasuries falling even as geopolitical tensions and economic uncertainty remain elevated.
Currency strategists say the dollar’s safe-haven appeal has weakened compared with previous crises. Reuters reported that the greenback’s modest rebound during the U.S.-Israel conflict with Iran may fade as broader concerns over tariffs, fiscal policy and Federal Reserve independence weigh on confidence. A February ING report also said the dollar had lost some of its safe-haven status, though it found no clear evidence of a rapid global move away from U.S. assets.
The dollar has also retreated from recent highs as investors assessed hopes of a possible Iran deal and shifting expectations for Federal Reserve policy. Traders have moved away from earlier expectations of rate cuts and are now weighing the possibility that the Fed could keep rates elevated for longer, or even consider further tightening if inflation remains persistent.
Higher Treasury yields have consequences far beyond Wall Street. They can increase borrowing costs for the U.S. government, raise mortgage and loan rates for consumers, and put pressure on equities by making bonds more attractive relative to stocks.
Analysts say the market is not signalling an immediate collapse of confidence in U.S. assets, but it is showing that investors are becoming more selective. The United States still benefits from the depth and liquidity of its financial markets, yet rising debt, policy uncertainty and inflation risks are forcing a reassessment.
For now, the sell-off has become a warning sign: the dollar and U.S. Treasuries remain central to global finance, but their safe-haven premium is no longer being taken for granted.
