Global Government Bond Sell-Off Pushes 10-Year U.S. Treasury Yield to 4.8%

Government bond yields across major global economies surged simultaneously, climbing to their highest levels in decades.

According to Bloomberg data, the yield on the 10-year U.S. Treasury rose 4.80 basis points (1 bp = 0.01 percentage point) from the previous trading session to close at 4.799% on September 1 (local time).

This marks the first time the 10-year yield has reached 4.8% since January of last year.

The 2-year yield, which is sensitive to monetary policy, increased by 5.80 basis points to 4.400%, while the 30-year yield climbed 3.10 basis points to 5.273%.

The 30-year yield has remained above 5% for the longest period since 2006.

The yield spread between the 10-year and 2-year Treasuries widened from 37.0 basis points the previous day to 39.8 basis points, showing a trend where upward pressure on yields, previously centered on short-term bonds, is shifting toward long-term bonds.

The yield on Japan's 10-year government bond also jumped 6.10 basis points to 2.996%, breaking above 3% for the first time since 1996.

The yield on the UK's 30-year government bond rose 7.60 basis points to 5.856%, marking its highest level since 1998.

The 30-year yields in Germany and France also soared to their highest levels since 2011.

The Wall Street Journal reported that the surge in bond yields is placing a burden on the global economy as a whole, pressing everyone from homebuyers and credit card holders to governments worldwide that have borrowed heavily in recent years.

Among them, UK government yields showed the largest increase among major European nations, highlighting an economic structure vulnerable to energy prices.

In addition, concerns over a "debt vicious cycle" were reflected, where higher yields in heavily indebted nations lead to increased refinancing costs and further borrowing.

Another factor driving up yields is that corporate bonds issued on a massive scale by U.S. tech companies to fund the artificial intelligence (AI) boom are eating into demand for government bonds.

Expectations for a Federal Reserve rate hike this month have grown since U.S. Federal Reserve (Fed) Chair Kevin Warsh suggested in remarks on August 28 that the fight against inflation is not yet over, while prospects for concurrent rate hikes by the European Central Bank (ECB), Bank of Japan (BOJ), and the central banks of Australia and New Zealand are also spreading.

Japan has entered an inflationary phase, moving away from decades of deflation, yet the Bank of Japan's slow pace of rate hikes has sustained downward pressure on the yen.

U.S. Treasury Secretary Scott Bessent recently stated that "the Japanese government and the Bank of Japan will take measures that will lead to a stronger yen," supporting market expectations that the pace of tightening will accelerate.

The market expects the BOJ's benchmark interest rate to finish the year at around 1.4%, whereas just three months ago, expectations of a hold at 1% throughout the year were dominant.

Derek Halpenny, head of Global Market Research EMEA at MUFG, warned that "we are already in the danger zone," noting that the higher yields climb, the greater the risk of a disruptive reversal in the stock market.

Laura Cooper, global investment strategist at Nuveen, said in an interview with Bloomberg TV, "Yields are going in an upward direction going forward."

(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.