The great “Sell America” frenzy that gripped markets this month has left what might well be a lasting dent in investors’ appetite for long-term U.S. government debt—the very backbone of Washington’s deficit-funding machinery. With President Donald Trump now approaching his first 100 days in office, investors grapple with a growing list of unknowns, none of which inspire confidence.

For bond giants like BlackRock, Brandywine Global, and Vanguard, the challenge isn’t just second-guessing the Fed’s next rate move – that would be too simple. No, it’s untangling what Trump’s scattergun approach to trade wars, tax cuts, and economic policy spells for already anaemic growth, stubborn inflation, and deficits that are spiralling out of control.
Let’s run through the hit parade of uncertainties: Will Trump’s tariffs choke off what’s left of global trade? Will his tax plans inflate the deficit faster than a cheap balloon? Is Jerome Powell about to be shown the door in another episode of “You’re Fired”? And is Trump really hell-bent on torpedoing the dollar?

The result: investors are demanding higher yields on longer-dated debt, calling into question the sacrosanct status of Treasuries as the world’s safe haven. The so-called term premium – the extra yield demanded for locking up money for longer – has now swelled to its highest since 2014, which, in case you forgot, wasn’t exactly a golden age.
We’re in a new world order. Even if Trump backs down on tariffs, the uncertainty will persist, so expect the risk premium to remain in place as well.

If Trump miraculously strikes a trade deal or stops rattling sabres at the bond market, some of this angst might subside. However, as Treasury Secretary Scott Bessent prepares to unveil the latest borrowing plans, he has the unenviable task of convincing investors that everything’s fine – while the White House does its best to prove otherwise.
All this chaos has left investors playing it safe, clinging to their benchmarks and bracing for higher long-term yields, even if growth stumbles. In other words, don’t expect bonds to bail you out next time the economy hits a bump.

To be fair, it’s not a full-blown Treasuries exodus. JPMorgan still sees them as a better bet than Europe’s basket-case sovereigns, and last week’s 30-year auction did draw some respectable bids – at the right price, naturally. But the mood remains edgy. Trump’s assurance that he has “no intention” of firing Powell was met with the same scepticism as his other “firm” positions.
PIMCO, no stranger to emerging markets, likened the recent triple-whammy – a weaker dollar, falling stocks, and shaky Treasuries – to a classic EM selloff. Their response? Snap up Treasuries, but only in the middle of the curve. They’re not about to trust the long end just yet.
Indeed, inflation-adjusted 30-year yields hit post-crisis highs this month, a lingering reminder that Trump’s trade tantrums have real consequences. Vanguard, for its part, thinks there’s more to come. Vanguard forecasts sub-1% growth this year – the worst since 2020 – and warns this doesn’t bode well for America’s budget black hole.

When the Treasury releases its following borrowing plans, expect more of the same: stable auction sizes, with Republicans still squabbling over how to pay for their latest tax handout. The fiscal farce continues.
Every basis point of extra yield now costs Washington over $1 trillion annually in debt servicing. BlackRock, managing nearly $12 trillion, isn’t impressed. The early April meltdown in U.S. assets has only deepened their concerns over post-pandemic fiscal fragility.

This market route indicates that investors are seeking greater compensation for risk and underscores the precarious nature of this balancing act.
So buckle up: the American Dream might still be for sale, but the price is rising.