Global Bond Rout Pushes Yields to Multi-Year Highs — SkimNews
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- US 10-year Treasury yields climbed to their highest level since November 2023, while Japan's 10-year government bond yield moved above 3% for the first time since 1996.
- UK 10-year Gilt yields hit a post-2008 high and German 10-year bund yields rose to levels not seen since 2011, with longer-dated yields in those countries also touching multi-year or multi-decade highs.
- Fed rate hike odds for the next FOMC meeting jumped to more than 66% following Fed Chair Kevin Warsh's Jackson Hole keynote on August 28, up from about 35% prior, according to ING.
- ING's Padhraic Garvey said market pricing for a 25-basis-point September Fed hike shifted from roughly 50-50 to 3-to-1 in favor, citing the Iran war and elevated energy costs as upward pressure on long-end yields.
- Brent crude rose 0.2% to $95.71 a barrel on Friday with WTI up 0.4% to $91.61, after reaching a one-month high on Thursday.
- Callanish Capital CEO Haig Bathgate warned that "once the inflation genie is out the bottle, it's very hard to put it back in," saying sustained inflation across the term structure will be a feature of markets going forward.
- Investors cited tariffs, industrial reshoring, increased defense spending, and geopolitical tensions as signs of a structural shift away from the low-inflation regime that prevailed from 2010 to 2020.
Why it matters: A synchronized bond sell-off is lifting borrowing costs for governments already running heavy fiscal deficits, and the Fed is now priced for a September hike rather than a cut — a sharp reversal of the easing expectations that anchored markets earlier this year. With investors demanding a higher term premium and central banks tapering their role as buyers of last resort, the stock-bond correlation that diversified portfolios for a decade is breaking down.
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