TREASURIES-US yields climb as court blocks Trump tariffs, safe-haven demand fades

By Kevin Buckland and Ankur Banerjee

TOKYO, May 29 (Reuters) - U.S. Treasury yields jumped during Asian hours on Thursday after a U.S. federal court blocked President Donald Trump's "Liberation Day" tariffs from going into effect, buoying market sentiment and dimming demand for safe-haven assets.

Bonds, gold, and traditional haven currencies such as the yen and Swiss franc were sold off after the little-known Manhattan-based Court of International Trade ruled on Wednesday that President Trump overstepped his authority by imposing broad duties on imports from countries with trade surpluses against the United States.

Minutes later, the Trump administration filed a notice of appeal and challenged the court's authority to block the tariffs.

The yield on the benchmark 10-year Treasury note US10YT=RR gained as much as 4.4 basis points (bps) to 4.523%, and was at 4.497%, as of 0230 GMT.

Two-year yields US2YT=RR leapt as much as 6 bps to 4.052%, and 30-year yields US30YT=RR rose about 2 bps to 4.999%.

U.S. S&P 500 futures EScv1 rallied 1.7% and the dollar strengthened 0.6% against the yen JPY=EBS and 0.7% versus the franc CHF=EBS, while gold XAU= retreated 0.8%.

"The knee-jerk reaction for equities to rally and bond yields to back up on the tariff pause makes sense. However, with tariffs now in the appeal process and likely heading to the Supreme Court, uncertainty is back," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.

"The pause also puts tariff revenue at risk, which could bring deficit issues back on the radar," he said.

Long-term U.S. yields have been steadily climbing this month, driven by anticipation surrounding Trump's sweeping spending and tax-cut bill as it moves to the Senate.

In its current form, the legislation would add about $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade, according to the nonpartisan Congressional Budget Office.