Yen Surges 1.1% as Trump Tariffs Spark Safe-Haven Rush

The Japanese yen emerged as the top performer among major currencies following President Donald Trump's tariff announcement, which sparked a wave of safe-haven buying. During the early trading session in Tokyo on Thursday, the yen appreciated by 1.1% against the US dollar, reaching 147.69. This marked the yen's largest gain since February 20, as Japan faced a 24% tariff rate in the tariffs imposed by Trump on global trading partners. The US dollar index extended its decline to 0.6%, the largest drop since March 5.

Investors rushed to safe-haven assets, leading to a significant rally in US Treasury futures. The 10-year bond yields in New Zealand and Australia also saw notable declines. New Zealand's 10-year bond yield fell by more than 10 basis points, while Australia's 10-year bond yield experienced its largest drop since July. Japan's 10-year bond yield recorded its biggest decline since August 2024.

The tariff announcement by Trump has heightened concerns about inflation and economic contraction, prompting investors to seek refuge in safer assets. This shift in investor sentiment has led to a broad sell-off in riskier assets, including equities and commodities, while driving up demand for government bonds and currencies perceived as safe havens, such as the Japanese yen. The yen's strength is further supported by its status as a traditional safe-haven currency, which tends to appreciate during times of global uncertainty and market volatility.

As global markets reacted to the tariff announcement, the demand for safe-haven assets surged. The Japanese yen, known for its stability and reliability, became a preferred choice for investors looking to hedge against potential economic downturns. The yen's appreciation against the US dollar and other major currencies reflects the heightened risk aversion among investors, who are increasingly concerned about the potential impact of Trump's tariffs on global trade and economic growth.

The decline in global sovereign bond yields further underscores the shift towards safe-haven assets. The significant drop in the 10-year bond yields of New Zealand, Australia, and Japan indicates that investors are seeking the safety and security of government bonds in the face of heightened economic uncertainty. This trend is likely to continue as long as concerns about inflation and economic contraction persist, driving demand for safe-haven assets and currencies.