Global Bond Yields Surge to Highest Level Since 2008
The global bond market is experiencing a selloff, with yields reaching their highest level in almost two decades. This move started after Federal Reserve Chairman Kevin Warsh doubled down on his vow to tame inflation, and was extended this week as energy prices rose due to renewed conflicts in the Middle East.
The yield on 10-year Japanese government notes has touched 3% for the first time since 1996, while UK 30-year yields reached their highest level since 1998. The 10-year Treasury rate hit levels last seen in January of this year, and the Bloomberg gauge of global sovereign bonds advanced to 3.72%, its highest since mid-2008.
Markets are pricing in a higher path for short rates in the US and globally, with investors reassessing what neutral policy rates look like. This has led to a gradual increase in those expectations, putting pressure on bonds that is unlikely to ease in the near future.