Disconnect Between Equities and Bonds. The U.S. equity markets soared today (4/9/25) on renewed investor optimism — but lurking beneath the surface is a disturbing.
Executive Overview
U.S. stocks rallied, but soaring overnight Treasury yields suggest China may be quietly selling U.S. debt in response to new tariffs. With bond markets flashing warning signs while Americans sleep, investors risk missing a major shift. This article explores the hidden risks behind the rally—and why the celebration may be premature.
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U.S. equity markets surged today (April 9, 2025), buoyed by optimism around moderating inflation and potential interest rate cuts from the Federal Reserve. But while Wall Street celebrates, storm clouds are gathering quietly in the bond market — and they’re forming halfway around the world, during the hours most U.S. investors are fast asleep.
Behind the scenes, U.S. Treasury yields have been rising sharply — not during the trading day, but overnight, when foreign markets are active. These overnight spikes are more than just market noise. They may be the clearest signal yet that China is quietly — but deliberately — selling U.S. Treasuries. And the implications could be significant for the U.S. economy and financial markets.A Subtle, Strategic Shift
China has long been one of the largest holders of U.S. government debt, peaking at over $1.3 trillion a decade ago. Today, those holdings have fallen to just $759 billion, the lowest level since 2009. While that trend has been in place for years, recent events suggest an acceleration in sales — and the timing may not be coincidental.
Just this week, the U.S. imposed a 125% tariff on Chinese goods, intensifying already fraught trade tensions. Hours later, the yield on the 10-year Treasury jumped from 4.1% to 4.5% — and it didn’t happen during U.S. trading hours. It happened in the dark, between 8 p.m. and 3 a.m. ET, when Beijing was open for business.
