Global Bond Yields Surge to Multi-Decade Highs Amid Inflation Fears

Global bond markets faced heavy selling pressure on Thursday, driving government borrowing costs in major economies to multi-decade highs. The surge was fueled by rising energy prices, persistent inflation concerns, and increased funding needs. The US 10-year Treasury yield hit 5.34%, its highest level since 2002, before easing slightly to 5.26%. Analysts warn that yields may continue to climb due to growing inflation and interest rate concerns.

The US 10-year yield saw its biggest quarterly rise this century in the three months ending September, reflecting economic uncertainty. Higher yields raise borrowing costs for companies, households, and governments. Rising energy prices and strong investment in artificial intelligence and data centers have intensified inflation worries and competition for capital.

France has become a key focus as its government prepares the 2027 budget, with proposed spending cuts facing political resistance. The French 10-year bond yield neared 5%, its highest since 2002, and posted its worst quarterly performance since 1987. The spread between French and German borrowing costs has widened to levels last seen during the eurozone debt crisis, raising questions about potential European Central Bank intervention.

Beyond the US and Europe, borrowing costs are rising elsewhere. Britain's 30-year bond yield surpassed 6% for the first time since 1998, while Japan's yields have surged for five straight quarters amid entrenched inflation. The Institute of International Finance estimates that advanced economies paid over USD 3.3 trillion in interest on government bonds last year, exceeding global spending on AI, defense, and clean energy.