Sudden sell-off shakes US bond market

SINGAPORE (Reuters) - U.S. Treasuries extended a crisp retreat connected Tuesday arsenic investors were having to merchantability bonds to screen losses successful different assets and scrambled to unwind expectations for heavy U.S. complaint cuts, successful the latest unsettling motion of imaginable accent successful fiscal markets.

Monday's scope for the benchmark 10-year output was 1 of the largest successful the past 2 decades portion expectations evaporated that the Federal Reserve would commencement cutting involvement rates wrong weeks to offset the economical symptom caused by immense U.S. import tariffs.

Ten-year yields changeable from an overnight debased of 3.87% to interaction 4.216% successful the Asian day. Market participants said the standard of moves and uncertainty successful Fed funds futures commercialized was unprecedented, arsenic pricing for 130 ground points of U.S. complaint cuts this twelvemonth collapsed to 92 bps successful a substance of hours.

Monday's 35-basis-point output scope was the eighth-largest connected Tradeweb information stretching backmost 25 years.

It was not wide what flipped the power from buying to selling, but the abrupt turnaround pointed to unit connected banal markets and sentiment arsenic markets lurch towards an April 9 deadline for U.S. tariffs. The S&P 500 has mislaid 10.7% successful 3 sessions.

"What bash you merchantability if you request to conscionable borderline calls oregon liquidity? Treasuries and gold," said Martin Whetton, caput of fiscal markets strategy astatine Westpac successful Sydney.

Buyers were truthful scarce that the selling pushed enslaved yields retired of enactment with swaps and sharply widened a usually dependable dispersed betwixt the two.

At the 10-year tenor the spread has changeable to much than 50 ground points, the largest connected record, portion the velocity of the determination successful the past fewer days has besides been record-breaking.

"It conscionable is simply a further validation of the mentation that there's little carnal buying of Treasuries," said Andrew Lilley, main involvement rates strategist astatine Sydney-based concern slope Barrenjoey.

"There's a play of clip successful immoderate marketplace stroke up, wherever you are not adjacent attempting to deliberation done the implications. You are simply liquidating each your risk."

Lilley said markets whitethorn besides beryllium starting to travel to presumption with a changed commercialized outlook that could trim overseas commercialized surpluses and planetary flows into the Treasury market, portion others said markets were simply unstable.

"There's a conspicuous deficiency of clarity," said Vishnu Varathan, caput of macro probe for Asia extracurricular of Japan astatine Mizuho successful Singapore.

Two-year yields roseate 7 ground points overnight and inched up to 3.796% successful the Asia session.

(Reporting by Rae Wee and Tom Westbrook; Editing by Aidan Lewis)