Mark Hulbert

Sat, Jun 21, 2025, 8:27 AM2 min read

U.S. Treasury bonds are seen as a safe haven at times of geopolitical upheaval and uncertainty — a refuge for global assets in the wake of a crisis. At such times, panicked investors flee to the perceived safety of the U.S. Treasury market, pushing up bond prices while yields fall.

Except that didn’t happen after Israel’s attack on Iran last week. This was a geopolitical crisis of major proportions, risking a wider war that quite conceivably could draw in the United States. Yet, instead of falling in the immediate wake of the Israel-Iran hostilities, which would indicate buying demand, the 10-year U.S. Treasury BX:TMUBMUSD10Y yield spiked.

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As of noon on June 13, the 10-year yield was 6 basis points higher than before Israel’s attack began. Countries whose 10-year government yields fell that day, indicating demand, were primarily from Asia — led by an 8-basis-point one-day decline in Australia’s 10-year bonds through midday on June 13.

Taken by itself, last Friday’s action is insufficient to conclude that the U.S. Treasury market has lost its safe-haven status. But many recent indicators are pointing in that direction. Perhaps the most significant occurred on April 2, when President Donald Trump announced huge tariffs on virtually all of the United States’ trading partners.

As the U.S. stock market plunged, some Wall Street heavyweights predicted that those tariffs would result in an “economic nuclear winter.” In the past that panic would have been accompanied by a clear flight to safety in U.S. Treasurys, with their yields correspondingly falling.

Yet after Trump’s April 2 tariff announcement, the U.S. 10-year Treasury yield rose while the composite yield on government bonds of developed non-U.S. countries fell.

Two large exchange-traded funds that invest in the government bonds of developed countries other than the U.S. are SPDR Bloomberg International Treasury Bond ETF BWX and iShares International Treasury Bond ETF IGOV. The BWX ETF has gained 9.3% and IGOV is up 10.0% so far this year, versus a gain of 3.6% for iShares 7-10 Year Treasury Bond ETF IEF. The ETFs have an effective duration of between seven and eight years, comparable to that of the U.S. 10-year Treasury.