Global bond markets resume sell-off as U.S. 30-year Treasury yield hits 2002 high

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Global bond markets sell-off

Highlights

U.S. 30-year Treasury yield rises 0.08 percentage points to 5.72 per cent, its highest since 2002, driven by inflation and debt concerns.
French 10-year government bond yield climbs to 4.91 per cent after a 0.16 point spike, signaling renewed fears of a eurozone debt reckoning.
Stoxx Europe 600 drops 1 per cent, S&P 500 and Nasdaq 100 futures fall 0.3 and 0.6 per cent, and Brent crude rises 1.4 per cent to $102 a barrel amid risk-off sentiment.

Long-dated yields climb across major markets

As reported by Financial Times, the global bond sell-off resumes on Wednesday, sending the yield on 30-year U.S. Treasuries up as much as 0.08 percentage points to 5.72 per cent, its highest level since 2002. Investors say fears over inflation, heavy public debt burdens and the lack of visibility on an end to the Iran war are all contributing to the latest move higher in yields.

European government debt also comes under pressure, with French and Italian yields rising 0.16 percentage points and putting both markets on course for one of their sharpest daily moves this year. France's 10-year borrowing cost reaches 4.91 per cent, moving back toward the post-2002 high touched earlier this week amid persistent concern that the eurozone's second-largest economy is heading for a debt reckoning.

Akshay Singal, global head of short-term interest rate trading at Citi, says France may be the first market under this kind of strain but not the last. He says the bond market is being driven by a shortage of credible budgetary policies globally, a concern often associated with so-called bond vigilantes, particularly in the UK.

Higher oil and debt concerns hit currencies and stocks

The latest bond-market turbulence spills into other asset classes, with the Stoxx Europe 600 down 1 per cent in early afternoon trading. Futures tracking the S&P 500 and Nasdaq 100 fall 0.3 per cent and 0.6 per cent respectively after both equity benchmarks touch record highs earlier in the week.

Evelyne Gomez-Liechti, multi-asset strategist at Mizuho, says Wednesday's selling is triggered by weaker risk sentiment as oil prices rise again. Brent crude gains 1.4 per cent to $102 a barrel, while she adds that long-term bonds remain difficult to buy for many investors because volatility is still high and pension funds and other real-money accounts are reluctant to step in.

In the U.S., the average rate on a 30-year fixed-rate mortgage hits 7.49 per cent on Wednesday, its highest level in almost three years, according to the U.S. Mortgage Bankers Association. The euro falls another 0.6 per cent against the dollar and touches its lowest intraday level against the pound since mid-2025, with ING forex strategist Francesco Pesole saying French risk is causing fresh idiosyncratic underperformance in the single currency.

Some investors nevertheless say the sharp move is beginning to create value in bonds. John Stopford, head of multi-asset income at Ninety One, says long-dated bonds would start to look meaningfully cheap if the sell-off extends much further, while John Thornton, head of fixed income at Keyridge Asset Management, says there is no hard ceiling on yields in the near term unless oil prices shift significantly.

We previously reported on how mounting concerns about France’s public finances were weighing on the euro and reshaping rate expectations in Europe. The piece explained that bond-market turbulence and doubts over fiscal credibility were pushing investors toward sterling, while also keeping markets highly sensitive to upcoming budget decisions and central-bank signals.

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