Bond Yields Soar to 20-Year High as Inflation Concerns Mount
The global bond market is experiencing a selloff, with yields reaching their highest level in almost two decades. The yield on a Bloomberg gauge of global sovereign bonds advanced for a fourth straight session on Monday, rising to 3.72%, the highest since mid-2008.
The move started after Federal Reserve Chairman Kevin Warsh doubled down on his vow to tame inflation and was extended as energy prices rose due to renewed conflicts in the Middle East. The rate on 10-year Japanese government notes touched 3% for the first time since 1996, while UK 30-year yields reached their highest level since 1998.
Investors are pricing in a higher path for short rates in the US and globally, with many expecting a quarter-point hike at the Federal Reserve's meeting this month. The selloff poses a challenge to Treasury Secretary Scott Bessent, who has been trying to keep yields contained through bond buybacks.
Long-end yields are expected to remain elevated due to concerns over inflation and fiscal challenges. Traders are pricing in some 17 basis points of tightening at the Fed's September meeting, with odds near 70% following Warsh's hawkish speech at Jackson Hole last week.