Global Bond Yields Rise to Multi-Year Highs as Inflation and Fiscal Concerns Intensify
Renewed inflation fears, higher oil prices and fiscal concerns drove selling across U.S., European and Japanese debt markets, pushing benchmark yields to levels not seen in decades.
- Global government bond yields surged to multi-decade highs on Tuesday as renewed inflation worries and fading United States-Iran peace hopes pressured markets. United States 30-year bond yields hit their highest level since 2007.
- Unsuccessful efforts to end the war put inflation fears front of mind for investors, who are pricing in a more extended closure of the Strait of Hormuz. Dan Coatsworth, head of markets at AJ Bell, noted rising yields reflect "concerns around high levels of government borrowing."
- Borrowing costs rose globally as oil prices hovered above $90 a barrel, further fanning inflation angst. Germany's 10-year Bund yield touched its highest since 2011, while Japan's benchmark 10-year yield reached a three-decade high just under 3%.
- Foreign holdings of United States Treasuries slid in June, led by declines from Japan, the British, and China. "JGB yields are now much more competitive as the BOJ normalises policy," said Charu Chanana, chief investment strategist at Saxo Bank.
- Competition for capital combined with rising budget deficits help explain the recent selling, analysts said. Sovereign debt sets the benchmark for corporate loans, meaning higher yields will likely increase borrowing costs for businesses and mortgages.
24 Articles
24 Articles
Global bond markets are getting hammered. Here’s what’s driving the sell-off
Investors’ concerns over a range of issues from inflation to hefty government deficits are driving a global bond market-sell off, creating a headache for policymakers and pushing up borrowing costs for governments and consumers.
Long-term financing costs in the major economies reached the highest levels in several decades this Tuesday, as concerns about inflation, fears about public deficits and the sharp increase in securities issues to finance artificial intelligence (AI) investments pressure sovereign debts around the world. Exclusive subject matter for subscribers. To have full access, access the link of the subject and register.
The long-term rate rises just as data from the US economy weakens: employment dropped unexpectedly in July, retail sales had their worst decline in more than a year, and underlying inflation was more moderate than expected.
In the US, the return on the 30-year government bonds almost rises to a 20-year high. In Germany, long-term interest rates have risen to a 15-year high. "This is the uncertainty," says capital market analyst Robert Halver in conversation with Dietmar Deffner.
Bond Hell Is Breaking Loose On, Or Ahead, Of Schedule
Well, that didn’t take long. Less than 24 hours after I wrote that soaring bond yields in the United States and Japan were one of the major reasons I thought the AI bubble could finally begin breaking later this year and into 2027, global markets woke up Tuesday morning and decided to provide a helpful...
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