Several prerequisites were presented to resolve the sharp increase in Government Bonds interest rates. Major conditions include significant individual negotiations during the reciprocal tariff waiver period, along with an analysis that the reduction in China's exports should not be too large, combined with President Trump's easing of protectionist policies.
On the 14th, Park Sang-hyun, a researcher at iM Securities, noted, "Due to inflation risks from the reciprocal tariff, it will be difficult for the Federal Reserve to hastily cut interest rates," adding, "As President Trump has suspended the implementation of reciprocal tariffs for 90 days, the Fed's wait-and-see atmosphere is likely to extend further."
Ultimately, according to Park's assessment, for Government Bonds interest rates to stabilize, significant individual negotiations must be concluded during the reciprocal tariff waiver period. Currently, individual tariff negotiations with major trading partners are the only way to somewhat mitigate concerns about reciprocal tariffs.
Additionally, although the likelihood is low, dramatic easing of U.S.-China tensions and easing of Trump's protectionist policies focused on tariff strategies were mentioned.
Furthermore, Park believes that the decline in China's exports in April and May should be better than the market expectations. He stated, "If China's export growth is significantly impacted due to the shock from tariffs, the intensity of China's retaliation against the U.S. could become even stronger," implying that actions such as large-scale selling of Government Bonds could occur.
He added, "The sharp increase in Government Bonds interest rates reflects the failure of Trump's second-term policy stance and shows that Government Bonds no longer serve as a safe asset," stating, "For the stock market to rebound, as well as to alleviate fears of economic recession, the Government Bonds interest rates need to show a downward trend again."