Investors are getting rid of their sovereign bonds worldwide, pushing borrowing costs to record levels for several years, from Japan to the United States. They fear that inflation related to the war will force central banks to adopt higher interest rates.
In the United States, the yield on two-year Treasury bonds has climbed to 4.07%, the highest level since March 2025. The yield on 10-year Treasury bonds has increased by seven basis points to reach 4.55%, its highest level in a year, while the yield on Japanese bonds has reached 4% for the first time since the launch of this benchmark in 1999. A political crisis in the United Kingdom has driven yields on 30-year gilts to a 28-year high.
The massive sell-off intensified as the weekend approached, with rising Brent prices amplifying concerns sparked by consecutive reports on inflation in the United States and the ongoing conflict between the United States and Iran. In addition to bets on Federal Reserve rate hikes, speculation about a tightening of monetary policy is also gaining ground in Japan, where producer prices have risen at the fastest pace since 2014.
“Bond yields really seem to be becoming uncontrollable,” said Subadra Rajappa, head of research at Société Générale Americas, on Bloomberg Television. “The market is not only testing the Fed, but also warning Congress. The higher interest rates rise, the higher funding costs go.”
“The rise in global bond yields is somewhat concerning,” said Prashant Newnaha, senior rates strategist for the Asia-Pacific region at TD Securities in Singapore.
Context:
Investors worldwide are expressing concerns and adjusting their positions based on the impact of inflation, geopolitical tensions, and potential central bank actions that may lead to higher interest rates.
Fact Check:
The text discusses the surge in bond yields globally, particularly in the United States, Japan, and the United Kingdom, driven by factors such as inflation fears, geopolitical conflicts, and political uncertainties. Central banks’ responses and market reactions are closely monitored as investors navigate through volatile economic conditions.
