Global Bond Markets Reel as Yields Hit Decades-High Levels

Global bond markets are experiencing significant turmoil as yields on long-term debt continue to rise. The yield on 30-year US Treasury bonds hit a high of 5.3 percent on August 17, its highest level since 2007 and up from 4.8 percent just a week earlier.

The surge in longer-dated debt issued by leading technology companies is one factor contributing to the rise in yields. These companies are ramping up capital spending on artificial intelligence, particularly data centers.

Another factor at play is concern over governments' ballooning public debts, exacerbated by additional spending to protect households and businesses from the energy shock caused by the US-Israel war against Iran.

The key driver of rising yields, however, is the Federal Reserve's reluctance to raise interest rates despite prolonged above-target inflation and a resilient economy. Citadel Securities reports that this inability to address economic issues while the economy is still growing contributes to stubbornly high long-term bond yields.