On April 13th, CITIC Securities Research reported that due to the limited economic significance of excessively high “irrational” tariffs in calculating tax rates, the significant increase in US bond interest rates this round is mainly due to the heavy selling of US bonds in the face of increasing credit and liquidity risks, which has reduced their function as traditional “safe haven assets”. In history, the announcement of US tariff increases has often been accompanied by short-term increases in US bond yields, but neither China nor the United States has shown a negotiating attitude in this round. In the short term, the trade friction between China and the United States may continue to escalate, and the magnitude of this tariff increase has reached an irrational level. Recent transactions have mainly focused on tariffs rather than economic data and fundamentals. In the short term, the US bond interest rate center may move upward, with wide fluctuations, and the amplitude of “irrational” tariff policies is relatively large. In the medium to long term, after the easing of trade frictions, if the fundamentals of the United States do not experience significant fluctuations and the US dollar remains the international reserve currency, due to the significant increase in interest rates during the tariff game in the early stage, coupled with subsequent interest rate cuts, US bonds may strengthen and the interest rate center may shift downwards.
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