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Opinion: The latest U.S. exemption list once again demonstrates that the bond market is forcing Trump to compromise

BlackRock’s BUIDL fund has seen rapid growth in the past few weeks, showing growing recognition of blockchain’s role in tradFi. The investor appetite for blockchain-based securities is growing, despite a market downturn. On Friday, April 11, BlackRock’s BUIDL fund surpassed $2.1 billion in assets under management on Ethereum ( ETH ). These funds account for 90.5% of all BUIDL tokens across the seven chains it supports. BREAKING: The BlackRock BUIDL fund's AUM on @ethereum surpassed $2 billion. BUIDL is currently available on 7 chains, with ~90.5% of the fund's AUM tokenized on Ethereum. pic.twitter.com/V3WeHVDp9Y The BUIDL fund has seen rapid growth in the past few weeks, rising from around $500 million in AUM to its current level of over $2 billion. Interestingly, this growth began just as fears over the ongoing trade war were rocking the markets. As stocks and crypto took a tumble, investors looked for safer, yield-bearing instruments like U.S. treasuries. The BUIDL fund, which generates yield through treasuries, was one of the beneficiaries of this shift. What is more, treasury yields are on the rise, with 10-year U.S. treasuries rising 13 basis points on April 11. While economic uncertainty is causing a panic in the U.S. bond market, especially overseas, higher yields will likely attract domestic investors. The growth of the BUIDL fund’s AUM showcases the increasing recognition of blockchain’s potential in traditional finance. Notably, BUIDL tokens are much more akin to traditional financial instruments than altcoins. Unlike most other crypto tokens, BUIDL tokens are explicitly securities, and regulations apply to their trade. For example, traders must pass a strict KYC process to hold and trade the tokens. They generate yield for holders through investment in U.S. treasuries. At the same time, the funds benefit from blockchain and asset tokenization, which make them more efficient compared to similar off-chain instruments. The platform boasts instantaneous and transparent settlement, leveraging blockchain tech for that purpose. It also features programmable compliance, with its smart contracts designed to adhere to regulations.

President Donald Trump acknowledged Thursday that his tariff policy changes will be problematic but said he pursued them because no one else had taken the issues on. Speaking at a Cabinet meeting, Trump defended the shift in trade strategy as a necessary correction, despite short-term pain. “The transition is difficult, but the end result will be positive,” he said, according to a CNBC livestream. Trump is not ruling out extending the 90-day pause on his “reciprocal” tariffs. During a Cabinet meeting, he stated that if he cannot secure favorable deals with U.S. trading partners, tariffs will revert to higher rates after the pause. When asked about extending the pause, he replied, “We’ll have to see what happens,” according to CNBC. The major U.S. stock market indices closed lower today, with the S&P 500 down 3.46%, the Nasdaq falling 4.31%, and the Dow decreasing by 2.50%. Bitcoin ( BTC ) gave up some of its gains from April 9 and is trading at $79,800. Overall, it was a challenging day for investors across the board. The remarks came as economic anxiety rises among U.S. monetary policymakers. Chicago Federal Reserve Bank President Austan Goolsbee expressed concern about a return to economic conditions seen during the COVID-19 pandemic. Citing a loss of confidence and growing anxiety within the district, Goolsbee warned that setbacks in sentiment could create broader risks for the economy. A Wall Street Journal report added further context to Trump’s trade approach, revealing that the former president had previously accepted the risk of a shallow recession in order to avoid a deeper depression. However, amid market volatility and a sharp rise in Treasury yields, Trump reversed course on some tariffs. The decision, influenced by collapsing bond markets and advice from National Economic Council Director Kevin Hassett, helped spur a market rebound on April 9. The S&P 500 posted its strongest single-day gain since 2008. Treasury Secretary Scott Bessent reportedly played a significant role in coordinating the policy shift.

Recent developments in the US Treasury market have raised concerns among financial analysts and investors. Jim Bianco, a prominent market analyst, highlighted an exceptionally rapid surge in the 30-year Treasury yield, noting a 56 basis points (bps) increase over three trading days. Anything similar like this hasn’t been seen since January 7, 1982, when yields were 14%. Bianco shared charts illustrating the 3-day change, showing recent volatility dwarfing historical norms. This likely suggests a forced unwind of the “basis trade,“ which is a strategy employed by hedge funds involving the simultaneous purchase of Treasury securities and the sale of corresponding futures contracts to exploit price discrepancies. Such an approach usually relies on substantial leverage and assumes stable market conditions. Bianco argues that this move reflects systemic stress and not human decisions, as it occurred at midnight ET. He notes that such a historic shift points to a forced liquidation, rather than deliberate rate outlook decisions by fund managers. Shortly afterward, Bianco reported the 30-year yield reaching 5%, up 67 basis points since the last 54 hours. He compares this to the 2022 Liz Truss crisis in the UK, where gilt yields surged 130 basis points in five days due to an aggressive fiscal policy. Several elements might be the cause, but it all starts with the introduction of new tariffs by Donald Trump and his administration. They officially take effect today, which has probably heightened inflationary fears and raised concerns about reduced foreign investment in US bonds. In addition, margin calls and increased volatility have compelled hedge funds to liquidate positions hastily, further destabilizing the market. There’s also some speculation about foreign entities, such as China, potentially reducing their US Treasury holdings, which has added to market apprehensions. Whatever the precise trigger, the sharp rise in Treasury yields means falling bond prices. This could lead to increased borrowing costs for the US government, as well as possibly widening the federal deficit. Not to mention that the current market turbulence has drawn parallels to past financial crises, leaving people to wonder if maybe the central bank interventions will take place to stabilize the situation. Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

Renewed US-China trade tensions under the Trump administration, dubbed by some as “Tariff War 2.0,” coincided with a sharp rise in the benchmark 10-year U.S. Treasury yield this week. The yield climbed to 4.36% , reportedly jumping significantly in just two days to reach its highest level in over a month. The spike suggests increased borrowing costs and growing investor unease regarding inflation and the large supply of government debt hitting the market. The yield surge also marks a shift in investor sentiment after weeks of relative calm in the bond market. Stubborn inflation fueled bets on the Federal Reserve keeping rates higher for longer, contributing to upward pressure on yields. Traders are now reassessing the timeline for potential Fed rate cuts, which had been aggressively priced in just weeks ago. Related: ‘Ignore China At Your Peril’: Ben Zhou Flags Yuan Devaluation’s BTC Impact Adding to the pressure, the U.S. Treasury Department held a $58 billion auction of three-year notes Tuesday – the first major debt issuance since the latest tariff news. While demand appeared reasonably strong, the auction cleared at an elevated yield, suggesting that investors are demanding more compensation to hold U.S. debt in a volatile macro environment. The prospect of higher import costs from the additional tariffs also influenced inflation forecasts. Related: BlackRock CEO Sees Economy Weakening, Warns Trump’s Actions Could Ignite Inflation Concerns are also mounting that key foreign buyers, especially China and Japan, could be reducing their U.S. debt holdings. China reportedly sold $50 billion in U.S. Treasury bonds, an action that can contribute to higher yields by reducing demand. Also, South Korea announced an aid package aimed at buffering shocks from global economic friction. While the White House hasn’t detailed further tariff plans, President Trump previously warned that initial actions might be “just the beginning.“ Such a rapid shift higher in benchmark yields puts downward pressure on riskier assets—including crypto—and generally tightens financial conditions. The 10-year yield influences mortgage rates and corporate borrowing costs, which impacts everything from housing demand to business investments. What does it mean: This isn’t just market noise; it represents the bond market’s forceful repricing of multiple risks—inflation heightened by tariffs, debt supply, and uncertain foreign demand—against earlier, perhaps overly optimistic, expectations for Federal Reserve rate cuts. Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.