Global bond markets have been shaken by another wave of selling.\nYields on government debt in several major countries have jumped to\ntheir highest levels since the 2008 global financial crisis, or even\nsince 2007.<\/p>\n
In the United States, the yield on the 10-year Treasury broke through\n5.004%, briefly touching 5.041% on Tuesday (15\/9\/2026). This is the\nhighest level since the close on 9 July 2007, or in 19 years.<\/p>\n
The surge in yields raises financing costs for governments and\ncorporations alike, while increasing pressure on countries with high\nlevels of debt.<\/p>\n
The rise in yields comes amid growing concerns about inflation and\nthe direction of central bank policy. The widening conflict in the\nMiddle East has pushed oil prices back above US$100 per barrel.<\/p>\n
The jump in energy prices could reignite inflation, pressuring\ncentral banks to maintain or even raise interest rates.<\/p>\n
Markets expect the Federal Reserve (the Fed) to raise interest rates\nfor the first time since 2023 on Wednesday (16\/9\/2026). The Bank of\nJapan (BoJ) is also expected to hike rates on Friday (18\/9\/2026).<\/p>\n
Meanwhile, the European Central Bank (ECB) raised rates last week and\nremains open to further increases in the coming months.<\/p>\n
The rise in yields does not only affect bond investors.<\/p>\n
For governments, higher yields mean greater costs to issue new debt.\nInterest payment burdens also grow, potentially reducing fiscal space to\nfund social programmes, defence and other government spending.<\/p>\n
\u201cA 5% yield is not a problem if the economy grows 6.5%. But if growth\nis only 5% while yields sit at 5%, it is a different story,\u201d said Samy\nChaar, Chief Economist at Lombard Odier, quoted by Reuters.<\/p>\n
Treasury Yields Sound a Market Alarm<\/p>\n
The rise in the 10-year US Treasury yield above 5% has drawn\nsignificant global market attention. The instrument is one of the key\nbenchmarks for pricing a wide range of financial assets, from corporate\nbonds to loans.<\/p>\n
As such, rising Treasury yields can increase funding costs across\nmany countries.<\/p>\n
However, the United States\u2019 ability to cope with higher debt costs is\nconsidered better than several other countries, given its relatively\nstrong economic growth.<\/p>\n
A number of analysts believe the US economy may still grow\nsufficiently to sustain 10-year borrowing costs above 5%. Other\ncountries, however, may not have the same capacity.<\/p>\n
Investors Lose Certainty<\/p>\n
Pressure in the bond market has been exacerbated by growing\nuncertainty over the direction of central bank policy.<\/p>\n
Fed Chair Kevin Warsh is known to dislike forward guidance, the\npractice of giving clear signals about the future direction of monetary\npolicy.<\/p>\n
This means investors must rely more heavily on economic data and\nstatements from central bank officials to determine the path of interest\nrates.<\/p>\n
\u201cAll central banks are now entering a new era without forward\nguidance. They are simply trying to build credibility and trust. But as\nseen in the bond market today, that approach has not yet succeeded,\u201d\nsaid Shriya Samarth, Head of EMEA Rates at StoneX, speaking to\nReuters.<\/p>\n
In her view, the market currently faces multiple problems\nsimultaneously, from the surge in capital spending on artificial\nintelligence (AI), fiscal concerns, to high levels of government\ndebt.<\/p>\n
\u201cAI capital spending adds to the problem. There is anxiety over\nfiscal policy. US debt has now reached US$40 trillion. Debt-to-GDP\nratios in the UK and the eurozone are also at historically high levels,\u201d\nshe said.<\/p>\n
Global Yields Soar Too<\/p>\n
The rise in yields is not confined to the United States. In Japan,\nthe 10-year government bond yield has broken through 3%, the highest\nlevel in three decades.<\/p>\n
In Germany, the 10-year yield reached around 3.55%, approaching its\nhighest level since 2009. France\u2019s 10-year government bond yield is also\nnear an 18-year high.<\/p>\n
Meanwhile, the UK\u2019s 10-year gilt yield hit 5.45%, its highest level\nsince 2007.<\/p>\n
These conditions show that the pressure on bond markets has spread\nacross major economies.<\/p>\n
Stock Markets Have Not Fallen, But Risks Are Rising<\/p>\n
Interestingly, the rise in bond yields has yet to halt the global\nstock market rally.<\/p>\n
Global equities have actually recorded strong gains this year,\nparticularly in shares linked to the artificial intelligence (AI)\nboom.<\/p>\n
The surge in AI sector investment has driven increased capital\nexpenditure, financing and corporate profit growth.<\/p>\n
However, rising yields remain a threat to equity markets, as they can\nincrease the cost of capital and make riskier assets relatively less\nattractive compared with bonds.<\/p>\n
\u201cIf yields continue to rise, there will certainly be knock-on effects\nacross various markets,\u201d said Khoon Goh, Head of Asia Research at\nANZ.<\/p>\n
Amid these conditions, the US government has taken several steps to\ncontain the rise in long-term yields, including increasing purchases of\ngovernment bonds through buybacks.<\/p>\n
However, these measures have so far failed to significantly halt the\nselling pressure.<\/p>\n
James Bilson, Global Fixed Income Strategist at Schroders, believes\nthe current rise in US yields does not signal increased government\ncredit risk.<\/p>\n
In his view, the bond market\u2019s main problems lie instead in fiscal\npolicy and inflation.<\/p>\n
\u201cThe combination of policies in place today is too loose to bring\ninflation sustainably down to 2%,\u201d he said.<\/p>\n
\u201cThis is the root cause of the current bond market weakness. If\ninflation can be brought under control, many other problems will become\nfar easier to resolve.\u201d<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/record-us-bond-yield-breaks-5-highest-in-19-years-1789476801", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }