Trump's series of actions have dealt a blow to the US debt, prompting foreign funds to flock to the European bond market: creating the largest buying volume since 2023.

The radical tariff policies led by the Trump administration and the "big and beautiful" bill that will significantly increase the budget deficit have caused the so-called "American exceptionalism" to collapse. In addition, Trump's remarks repeatedly threatening the independence of the Federal Reserve's monetary policy have ultimately caused continuous turbulence in the U.S. bond and dollar markets, prompting overseas investors to flock to European markets. The latest statistics show that overseas buyers purchased nearly 100 billion euros (approximately $116 billion) worth of Eurozone bond assets in May, setting a record for the strongest buying scale by overseas buyers since 2023. Statistical data released by the European Central Bank on Friday shows that in the weeks following the tariff declaration made by U.S. President Trump, traditional asset management institutions' global fund managers have been selling U.S. bond assets in large numbers and seeking to allocate European safe sovereign bond assets such as German government bonds. Since records began in 2013, May has seen overseas total Eurozone bond purchases exceeding the latest statistics only three times. Foreign investors bought nearly 100 billion euros of Eurobonds in May. At the same time, data from the U.S. Department of the Treasury shows that the total amount of U.S. Treasury bonds accumulated by foreign investors in May reached $9.05 trillion, an increase of $32.4 billion from April. However, market concerns about whether Trump's tariff policies will significantly raise inflation and the gradual collapse of the so-called "American exceptionalism" under the impact of Trump's policies, the U.S. bond market is still in a trend of selling off and falling prices. Since April 2, the U.S. 30-year Treasury bond yield has risen by 50 basis points, compared to only a 15 basis point increase in the equivalent German bond yield during the same period. In addition, with the Trump-led "big and beautiful" bill expected to significantly expand the government's budget deficit and the uncertainty caused by the Japanese Upper House election in government spending expectations leading to a sharp rise in long-term Japanese government bond yields and causing a spillover effect in the bond market. These factors have collectively intensified the upward pressure on U.S. Treasury yields in the near term, especially the 10-year U.S. bond yield, known as the "anchor of global asset pricing," and longer-term U.S. bond yields may be on the verge of a significant uptrend. Analyses based on data from the debt management office by the European banking giant Barclays show that global official institutions (including global central banks and sovereign wealth funds) have subscribed to one-fifth of Eurozone government bonds issued by large commercial banks so far this year, up from 16% last year to 20% this year. Compared to the United States, the more stable policy pace in Europe, the relatively low budget deficit outlook, and lower inflation levels make sovereign bonds in the region more attractive to global central banks compared to U.S. bonds. Additionally, lower inflation provides the European Central Bank with a broader space to further reduce interest rates to stimulate economic growth when necessary. This week, the U.S. Treasury bond market came under pressure again, mainly due to Trump further threatening to dismiss Federal Reserve Chairman Powell, causing market doubts about the independence of the Federal Reserve's monetary policy, as well as the "big and beautiful" bill led by Trump which may significantly raise the budget deficit and market demands for higher long-term U.S. bond yields. The so-called "term premium" is back in the spotlight - meaning that the expectation of interest rate cuts is temporarily unable to dominate market trading logic due to a rapid cooling. The term premium, referring to the additional government bond yield compensation required by investors holding long-term bonds due to risk, has been hovering at its highest level since 2014. According to some economists, in the Trump 2.0 era, government bonds and budget deficits will be much higher than official estimates, mainly due to the new government led by Trump with a core framework of economic growth and protectionism based on "domestic tax cuts + foreign tariffs", coupled with the growing budget deficit, U.S. debt interest, and military defense spending. The U.S. Treasury's borrowing size may be forced to expand even more than the spendthrift Biden administration in the "Trump 2.0 era", especially as under the backdrop of "de-globalization", China and Japan may significantly reduce their holdings of U.S. debt, the "term premium" is bound to rise higher than ever before.