The bond vigilantes won. The spike in yields helped drive the president to pause his trade war.

• Stocks got a lot of attention this week, but it was the bond market that may have moved Trump more to pausing the trade war.
• The president said he was "watching" the steep sell-off in bonds before he paused his tariffs on Wednesday.
• Yields are down sharply Thursday, moving back in the direction the Trump team has said it wants.

Bond investors made their message on tariffs clear to Donald Trump — and helped push the president to pause the trade war.

So-called bond vigilantes — investors who protest what they see as negative developments in the market by selling Treasurys to drive up yields — are likely taking a victory lap a day after Trump announced a 90-day pause in reciprocal tariffs and handed the stock market its best day in decades.

Trump himself nodded to the bond market late Wednesday. Speaking on the White House driveway, Trump told reporters that he was watching the steep sell-off in bonds prior to announcing the pause.

"The bond market is very tricky. I was watching it, but if you look at it now, it's beautiful. The bond market right now is beautiful," Trump said. "But I saw last night where people were getting a little queasy," he added, pointing to the steep sell-off in bonds on Liberation Day, where he first unveiled his aggressive slate of reciprocal tariffs.

Bonds yields spiraled higher in the last week as the trade war deepened, even as stocks sold off and recession fears spiked. Usually, yields drop in times of uncertainty as investors look for safe havens.

After hitting the highest level since Trump entered office in January, yields — which trade inversely to prices — fell sharply Thursday morning.

The 10-year Treasury yield, which is a key barometer the administration has said it's been watching, was down nine basis points to around 4.306%.

Following the pause, Trump also said he watched a recent interview with Jamie Dimon on Fox Business, where the JPMorgan CEO said that a recession was now a "likely outcome," and that bonds were sending out nervous signals about the health of the market.

Kevin Hassett, the director of the National Economic Council, said the bond sell-off on Wednesday prompted the president to act with more urgency when deciding to pause tariffs.

"There's no doubt that the Treasury market yesterday made it so that the decision that, you know, it is about time to move was made with, I think, perhaps a little more urgency. But it was going to happen," Hassett said on Thursday.

"The Bond Vigilantes have struck again," Ed Yardeni, the president of Yardeni Research, wrote in a note. "Even though the Stock Vigilantes were clearly telling President Donald Trump that his tariff policy was misguided late last week, his advisers touted falling oil prices and bond yields as ultimately helping Main Street America."

The 10-year US Treasury yield is important to Trump because the president's team has said they're aim is to lower borrowing costs for Americans. The 10-year yield is an important lending benchmark for many consumer loan products, including mortgages.

"We cut the spending, we cut the size of government, we get more efficiency in government, and we're going to go into a good interest rate cycle," US Treasury Secretary Scott Bessent said earlier this year.

It's been a wild few days for bonds amid the latest tariff developments. Prior to the 90-day pause, the 10-year yield spiked as high as 4.45%, seeing its largest three-day increase since 2001.

It's not the first time the bond market has thrown a fit in response to Trump's tariffs. The 10-year yield shot as high as 4.8% in the weeks after Trump first unveiled his tariff plan on Mexico and China, which signaled investors' concerns about the impact of tariffs on inflation and expectations that the Fed would have to keep rates high.

The president has paused the trade war but tariffs aren't gone. Tariffs on China went up further, with Trump lifting duties on goods imported from the country to 125%. But for other countries, negotiations are heading in the right direction, Trump said.

"They're all calling, 'How do we do this?' They all want to make a deal. Somebody had to do what we did," he told reporters on Wednesday. "We'll see how it all works out. I think it's going to work out amazing."