Stories
Global Bond Sell-Off Drives US 10-Year Yield to 2002 High
- •Global bonds faced heavy selling pressure, pushing borrowing costs in the US, France, and Japan to multi-decade highs.
- •The US 10-year Treasury yield surged to 5.34%, its highest level since 2002, reflecting increased financing costs for companies and governments.
- •Higher rates are tightening financial conditions and could increase the risk of an economic slowdown, despite a strong broader economy.
- •France's 10-year borrowing costs hit their highest since 2002, with the gap between French and German yields at a multi-year high.
- •Upward pressure on yields is global, with Britain's 30-year yield exceeding 6% and Japan's sovereign yields seeing unprecedented gains.
Key Questions Answered
A heavy global bond sell-off driven by surging energy costs fanning inflation, along with increased competition for capital from the artificial intelligence and data-center boom, pushed the US 10-year Treasury yield to 5.34%, its highest level since 2002.
French 10-year borrowing costs hit their highest level since 2002, trading close to the symbolic 5% mark as the government presented a 2027 budget bill facing potential resistance in parliament. The yield spread between French and German 10-year debt reached its highest since the 2010s euro zone debt crisis, and default insurance costs hit a peak not seen since 2013.
Traders have scrambled to reverse earlier projections for interest rate cuts and now anticipate at least three more Federal Reserve rate hikes before the middle of 2027, following a rate hike the previous month.
