Global Bond Rout Pushes US Treasury Yields to 24-Year Peak

Post by : Saif

Global bond markets came under fresh selling pressure on Thursday, pushing government borrowing costs in the United States, France, Britain and Japan to multi-year highs. Rising energy prices, strong economic growth and higher expectations for interest rates are putting pressure on bond markets worldwide.

US 10-year Treasury yields climbed to 5.34%, their highest level since 2002. The benchmark yield later eased to around 5.26% as some investors returned to the market and bought bonds at lower prices.

US Treasury Yields Reach 24-Year High

The 10-year US Treasury yield is closely watched because it influences borrowing costs across global financial markets. Its latest rise came after the yield recorded its biggest quarterly increase in more than three decades during the three months through September.

Higher Treasury yields can increase borrowing costs for businesses and households. Mortgage rates may also face pressure, while governments can be required to spend more on interest payments.

Investors are closely watching whether the rise in yields could eventually weaken economic growth. Some analysts said financial conditions are already becoming tighter as borrowing costs increase.

France Faces Pressure From Rising Debt Costs

France has also become a major focus for bond investors as its government presents its proposed 2027 budget.

French 10-year government bond yields moved close to 5%, reaching their highest level since 2002. French bonds also recorded their weakest quarterly performance since 1987 during the three months ending in September.

Higher borrowing costs come as the French government faces challenges in securing support for planned spending reductions and other budget measures.

The difference between French and German 10-year borrowing costs has also widened to levels not seen since the euro zone debt crisis of the 2010s. The cost of protecting French government debt against a possible default has reached its highest level since 2013.

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UK and Japan Bond Yields Also Rise

Britain's 30-year government bond yield moved above 6%, reaching its highest level since 1998. Higher borrowing costs are coming as UK house-price growth slows, highlighting the effect of tighter financial conditions on the wider economy.

Japan has also experienced a sharp rise in government bond yields. Inflation has increased after decades of very low price growth, putting pressure on the country's bond market.

Japanese government bond yields have recorded double-digit gains for five straight quarters, adding to concerns about the cost of government borrowing.

Energy Costs and AI Investment Add Pressure

Higher energy prices have increased inflation concerns and reduced expectations that central banks will be able to cut interest rates quickly.

At the same time, rapid investment in artificial intelligence and data centers is increasing competition for capital. Strong economic activity has supported equity markets but has also contributed to expectations that interest rates could remain higher for longer.

Higher long-term rates could therefore continue to influence government finances, company investment, mortgages and other borrowing costs across major economies.

Market participants are now watching whether bond yields will stabilize after the latest sell-off or remain under pressure as inflation, energy prices and economic growth continue to shape expectations for interest rates.

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