U.S. Treasuries, the bedrock of the global financial system, were hit by fresh selling pressure on Wednesday in a sign investors were dumping their safest assets as turmoil unleashed by U.S. tariffs prompts forced selling and a dash for cash.

Bonds are typically seen as a safe place for investors to park their money. With the market selloff happening right now, investors should be reaching for them, which would drive the yields down — but that's not happening.

Ten-year Treasury yields have risen 44 basis points to 4.44 per cent this week alone as prices tumble. If sustained, that would mark the biggest weekly jump since 2001.

The dollar, also a traditional safe haven, weakened against other major currencies in further evidence that confidence in the world's biggest economy has been shaken.

The rout in the roughly $29-trillion US Treasury market dragged borrowing costs across the globe higher, raising pressure on central banks and policymakers to act fast to shelter economies facing a sharp slowdown as the highest U.S. tariffs in more than 100 years took force.

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Japan will co-operate with the Group of Seven advanced economies and the International Monetary Fund to help stabilize a market rout, the country's top currency diplomat said.

The Japanese 30-year government bond yield surged to 21-year highs and Britain's 30-year bond yields rose to their highest since 1998. In contrast, German 10-year bonds were steady.

As New York trade got underway, Treasuries succumbed to fresh selling pressure, with 10-year yields last up some 20 basis points on the day.

Long-dated bonds were the focus of intense selling from hedge funds, which had borrowed to bet on usually small gaps between cash and futures prices.

Thirty-year Treasury yields rose 20 basis points to 4.92 per cent. They have surged 53 basis points over three days, their biggest three-day jump since 1982.

The selloff in long-dated bonds pushed the gap between two- and 10-year yields to the widest since 2022.

Stemming a crisis

Rising government borrowing costs filter across to corporate loans and mortgages, meaning what happens in bond markets can cause economic damage to businesses and households.

The U.S. Federal Reserve may need to cut rates by more than expected or offer a targeted lending facility, similar to the measures taken during the COVID-19 crisis and global financial crisis, some analysts said.

"Would expect to have some central bank response in the near term if markets continue to behave like they have been in the last 12-24 hours," said Mark Elworthy, Bank of America's head of fixed income, currency and commodity trading in Australia.

Others have pointed to potential changes in global trade flows over the long run slowing foreign buying of U.S. debt, or that foreign holders could turn sellers.

Soft demand for the U.S. Treasury's $58-billion auction of three-year notes fuelled worries about tepid interest in the $39-billion sale of 10-year notes and a $22-billion auction of 30-year bonds on Thursday. The cost of insuring against a U.S. default, meanwhile, has risen.

"Markets are now concerned that China and other countries could 'dump' U.S. Treasuries as a retaliation tool," said Grace Tam, chief investment adviser at BNP Paribas Wealth Management in Hong Kong.