Global government bond yields near 4% for first time since 2007
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A global bond selloff has pushed the average yield on government bonds to 3.99%, the highest level since 2007, according to the Bloomberg Global Aggregate Treasury Index. The selloff is led by US Treasuries, driven by strong economic data and a weak 5-year note auction, which was the second worst since 2018. Analysts from ING Groep NV, Pendal Group, and TD Securities warn the selloff may continue due to persistent inflation, tight labor markets, fiscal concerns, and the risk of further central bank tightening. The rising yields are increasing borrowing costs for corporations and homeowners and pressuring stock markets. The pressure extended to Asia on Thursday, with Australian and New Zealand bond yields hitting multi-year highs. Strategists at JPMorgan and KKR expect US yields to climb further as energy-driven inflation and government borrowing persist.
Source report
A deepening bond sell-off has driven the average yield on global government bonds to within striking distance of 4%—a level not seen since 2007.
The Bloomberg Global Aggregate Treasury Yield Index rose 8 basis points on Wednesday to 3.99%. U.S. Treasuries led the decline, fueled by strong economic data and a 5-year note auction that pushed much of the yield curve to multi-year highs. By one measure, the 5-year auction was the second-worst since records began in 2018.
“This move may be far from over,” wrote Padhraic Garvey, head of Americas research at ING Groep NV, in a report.
Despite yields already being elevated, investors remain cautious toward government bonds. Ongoing conflict in Iran, persistent inflation, and growing fiscal concerns have reinforced expectations that interest rates will stay higher for longer. The pain extends beyond bonds: rising borrowing costs are squeezing corporations and homeowners alike, while dampening expectations for future corporate earnings—putting pressure on equity markets.
“Inflation remains stubbornly high and difficult to reverse in many places. Labor markets remain tight for various reasons, and the economy continues to grow well despite higher fuel and other prices,” said Amy Xie Patrick, a fund manager at Pendal Group. “Given all these factors, bonds are actually behaving quite rationally in terms of economic fundamentals.”
Pressure spread to Asia on Thursday. Australia’s policy-sensitive 3-year government bond yield surged 13 basis points to 5.07%, its highest level since May 2011. New Zealand’s 2-year yield rose as much as 17 basis points, approaching 4%. Japan’s 10-year yield also climbed after markets reopened following a three-day holiday.
Strategists at JPMorgan and KKR see further room for U.S. yields to rise, as energy-driven inflation, heavy government borrowing, and the risk of additional central bank tightening continue to build.
“Most fixed-income investors want higher yields, but they also want stability—they fear sudden shocks,” said Hans Mikkelsen, a strategist at TD Securities.
Source
新浪财经Eastern