- Better-than-expected jobless claims and final GDP were quickly overshadowed by a sudden risk-on move that sent Treasury yields sharply lower.
- A suspension of Greenland-related tariff threats on European allies sparked a rally in Treasuries and equities while pushing gold down and the VIX lower.
- Technically, the 5-year yield filled its bearish gap, but the 10- and 30-year still show unfilled gaps near 4.233% and 4.843% that may guide near-term positioning.
- Until those levels are decisively filled or broken, Treasury direction remains binary and encourages tactical, risk-managed duration exposure.
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The episode highlights the brittle nature of market confidence when faced with intersecting geopolitical and technical risks. The trigger was clear: proposed tariffs on key European allies over Greenland were called off, jolting risk assets upward and pushing yields lower—especially in the shorter-to-intermediate parts of the curve. [](#cit1) “Tariff reprieve jolts markets, Treasury gaps loom,” described how yields fell several basis points in a 20-minute window after the trade policy reversal. [](#cit1)
Technical structure remains central to the next moves in Treasuries. The 5-year yield filled its bearish gap from earlier in the week, a movement that adds some bullish credence at that maturity. [](#cit1) However, the 10- and 30-year yield curves possess gaps that are only partially narrowed. Crucially, the 10-year weekly chart gap shows up at ~4.233%, while the 30-year bears a similar feature around ~4.843%. These levels act as resistance for bulls and risk thresholds for bears. [](#cit1)
Sentiment indicators also swung sharply. The VIX dropped over 5% after markets embraced the tariff suspension, signaling relief. [](#cit2) But underlying risks—both from inflation (potentially stoked by trade policy) and growth (threatened by both trade disruption and geopolitical uncertainty)—could reawaken volatility. Institutions are likely hedging or reducing exposure until either the gaps are clearly filled or broken.
Strategic implications follow: until and unless yields rise to fill those technical gaps (10yr to ~4.233%, 30yr to ~4.843%), a short bias is defensible. However, any sustained rise above those levels could flip sentiment strongly the other way. For portfolio strategists, this means nimble duration trades, pay-down of interest rate exposure, and scrutiny of sectors sensitive to both inflation and trade distortion—industrials, exporters, materials. In fixed income, protection in the belly of the curve (5–10 years) along with long duration might balance non-linearly against both upside and downside.
Open questions remain: Will the tariff “reprieve” prove durable or merely a pause until negotiations—or escalation? Will inflation re-accelerate if supply chains are disrupted anew? And to what extent will foreign demand for US Treasurys hold if trade tensions resurrect or if yield suppression is viewed as policy risk? These will shape whether the technical gaps are filled or reinforced.
Supporting Notes
- Weekly jobless claims were expected at 209,000 but reported at 200,000; final GDP came in at 4.4% vs expected 4.3%; price index matched expected 3.8%.
- After tariff threats on European countries tied to Greenland were called off, Treasury yields dropped, the S&P 500 spiked ~90 points, and gold fell about $100.
- The 5-year yield filled its bearish gap from Tuesday; 10- and 30-year yield gaps were only narrowed.
- The 10-year yield’s gap appears in the weekly chart; the levels to fill are ~4.233% (10-year) and ~4.843% (30-year).
- The VIX dropped over 5% to 15.94, marking a sharp reversal from fears over Greenland tariffs and signaling a risk-on tilt in markets.