What’s Moving U.S. Bond Markets Now: Yields, Inflation & Geopolitics

The recent surge in Treasury yields reflects a confluence of geopolitical, economic, and policy-driven stressors that are altering global perceptions of U.S. assets. As of January 20, 2026, the 10-year U.S. Treasury yield stood at approximately 4.29%, its highest level since mid-2025. At the same time, the 30-year yield rose to around 4.92%—both driven by investor anxiety over renewed trade tensions, inflation expectations, and uncertainty surrounding U.S. fiscal policy.

A central catalyst has been President Trump’s threats to impose tariffs on multiple European countries unless Denmark agrees to sell Greenland—moving from 10% in February to potentially 25% by June. This has triggered strong backlash from EU leaders, deepening transatlantic friction and raising questions about the legal and economic consequences of such unilateral trade moves.

The “Sell America” trend—that is, investors selectively reducing exposure to U.S. equities, Treasuries, and other dollar-denominated assets—has gained renewed momentum. European institutions, including Denmark’s AkademikerPension, are signaling exits from U.S. Treasuries, while bond and equity markets alike are reacting to perceptions of elevated policy risk and a weakening safe-haven narrative.

Inflation remains a persistent concern. The bond market is focused on the cost of current and future goods: tariffs act both as direct price shocks and psychological amplifiers. In parallel, investors are watching the Administration’s public conflicts with the Federal Reserve, which raise the possibility of pressure to interfere with monetary policy in ways that could distort inflation expectations.

From a strategic perspective, these developments have several implications:

• U.S. borrowing costs are under upward pressure: rising 10- and 30-year yields increase costs for mortgages, corporate debt, and government financing. If yields stay above ~4.3–4.5%, many interest-sensitive sectors will face headwinds.
• Equity markets face valuation stress: higher long-term rates reduce the attractiveness of U.S. equities, especially growth and tech sectors that depend heavily on low-rate discounting of future earnings.
• U.S. credit rating and global financial center status could weaken if policy unpredictability continues, especially combined with large deficits and questions over Fed independence.
• Policymakers face trade-offs: balancing protectionist or territorial ambitions (like Greenland), domestic political goals, inflation control, and maintenance of international alliances and investor confidence. Missteps risk provoking foreign retaliation, weakening of trade access, and deeper misalignment in global capital flows.

Open questions include:

• To what extent will European partners actually follow through with retaliation—either through tariffs, trade barriers, or withdrawal from U.S. assets?
• How will the Fed respond if inflation remains persistently above targets while also facing political pressure? Will it maintain independence?
• Will investor risk premium on U.S. sovereign debt continue to rise or stabilize, especially if borrowing deficits widen substantially?
• What happens if the “Sell America” dynamic intensifies—will demand for alternative safe assets like gold or foreign sovereign bonds significantly rise, pushing down the U.S. dollar or boosting yields still further?