Treasury yields fall from multiyear highs — SkimNews
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- U.S. Treasury yields fell Thursday, with the 10-year dropping 5 basis points to 5.243% after breaching a level not seen since April 2002, and the 30-year declining more than 2 basis points to 5.613% after hitting a 24-year high.
- Sovereign borrowing costs surged globally — Japan's 10-year hit its highest since the mid-1990s, Germany's bund topped 3.6% (highest since 2008), France's 10-year climbed 8 basis points to 4.925%, Italy's rose 10 basis points to 4.706%, and the UK's 10-year gained 5 basis points to 5.483%.
- The Institute of International Finance warned that major economies face "persistently large deficits and rising interest expenses — challenges long associated with debt-distressed emerging market sovereigns."
- Jeff Kilburg, CEO of KKM Financial, said the 10-year could pull back to 4.5%-4.75% if the U.S. and Iran reach a deal to end the war, but warned continued conflict would be "problematic for the 10-year yield."
- Nomi Prins, founder of Prinsights Global, told CNBC that bonds have been moving in lockstep with oil prices, which have been turbulent as the U.S.-Israel war with Iran obstructed Middle East crude exports, with Brent crude back above $100 a barrel.
- Sovereign wealth funds and central banks are unlikely to step in as Treasury buyers, according to Prins, who said yields would fall significantly only if oil drops or there is a Middle East resolution.
Why it matters: The 10-year Treasury directly sets rates on U.S. mortgages, auto loans, and credit card debt, so the 5-basis-point retreat to 5.243% offers modest consumer relief. But the IIF's characterization of major economies as facing 'emerging-market-style' debt stress, combined with simultaneous yield surges in France, Italy, and the U.K., shows fiscal risk is being priced in more aggressively than the U.S. headline captures.
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