Global Bond Market Turmoil: Yields Soar Amid Inflation and Geopolitical Tensions

The global economy is facing increased uncertainty due to rising inflation and tensions between the United States and Iran. This has led to a surge in demand for long-term sovereign bonds, causing yields on US Treasury bonds to skyrocket.

Last week, two auctions of U.S. Treasury bonds captured market attention after the yield demanded to purchase US debt reached its highest level since 2007 for 10-year securities, with a yield of 4.683%. The yield on 30-year bonds also rose to 5.216%, the highest in a quarter of a century.

The trend has been echoed in other countries, including Europe and Asia, where long-term sovereign bond yields have also increased significantly. In Germany, the yield on the Bund exceeded 3.27% for the first time in 15 years, while comparable French debt returned to levels above 4.12%, a high not seen since 2008.

Economists point out that the rising cost of money reflects the strength of the economic cycle, sustained by investment in AI and fiscal backing that keeps consumption high. However, some experts warn that tensions in financial markets, political uncertainty, or a possible liquidity crisis could lead to an increase in sovereign bond yields.