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Global Bond Selloff Pushes 10-Year Treasury Yield Toward 5%
Government bonds are loans that investors give to countries.
Investors demand higher interest when they worry that prices will keep rising or that governments will have larger debt burdens.
Those concerns are causing bond prices to fall and yields to rise in many countries.
The 10-year United States Treasury yield is close to 5%.
Higher oil prices are adding to fears that inflation could remain high.
The latest producer-price data also increased expectations of a Federal Reserve rate hike.
Investors are waiting for the August consumer-price report for more clues.
If inflation is stronger than expected, bond yields could rise further.
The 10-year United States Treasury yield reached 4.98% intraday and is nearing 5%.
Bond yields have climbed across Japan, Germany, Italy, the United Kingdom, and Australia.
Rising oil prices, inflation fears, central-bank policies, and fiscal concerns are driving the selloff.
Brent crude is above $106, up 20% over the past month, increasing rate-hike expectations.
Markets are awaiting August United States CPI data, which could influence the Federal Reserve’s next decision.
- Who
- Global bond investors, national governments, central banks, the Federal Reserve, and the United States Treasury are involved.
- What
- Government bond yields are rising worldwide, with the 10-year United States Treasury yield nearing 5%.
- Where
- The bond-market selloff is affecting major economies including the United States, Japan, Germany, Italy, the United Kingdom, and Australia.
- When
- The 10-year yield reached an intraday high of 4.98%, while August United States CPI data is due today; the next FOMC meeting is scheduled for September 15–16.
- Why
- Rising oil prices, inflation concerns, expectations of tighter monetary policy, and fiscal-deficit worries are pressuring government bonds.
Key facts
- 10-year Treasury yield
- 4.95%, after reaching an intraday high of 4.98%.
- Potential next level
- The yield could break above 5% and potentially test approximately 5.22%, its reported 20-year high from August 2006.
- 30-year Treasury yield
- 5.38%, described as a 19-year high.
- Brent crude
- Above $106 per barrel and up 20% over the past month.
- August CPI expectation
- The market expects United States headline CPI to remain around 3.4%.
- Fed hike probability
- Markets priced a 67.4% chance of a 25-basis-point hike next week, up from 61% before the producer-price report.
- Treasury buyback
- The United States Treasury repurchased $5.2 billion of bonds, below the $6 billion cap and roughly half of the $10.5 billion offered.
- United States debt interest cost
- Reportedly exceeded $1.27 trillion as of August 31, with total debt at $40 trillion.
Sources
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