Global bond markets are signaling that governments must pay more to borrow long-term

From Yahoo Finance: 2025-05-22 12:45:00

Investors are demanding higher yields in response to global economic uncertainty, impacting government bond sales in the US, Japan, and the UK. Poor auction results and credit rating downgrades are fueling concerns about rising debt levels. Bond markets are reacting to concerns about fiscal policy and inflation, with long-term bond yields spiking to record highs.

Long-term government bond yields are rising due to fears of inflation and increased government spending. U.K. and U.S. 30-year bond yields have seen significant increases this year. Moody’s projects U.S. public debt to reach 134% of GDP in the next decade. Investors are reevaluating term premia and demanding higher returns for holding longer-term bonds.

Foreign participation in U.S. Treasury auctions is declining, with Japanese investors selling off longer-end Treasuries and JGBs. Concerns about deficits and fiscal policy are affecting bond markets globally. Japan’s upcoming election and plans for fiscal stimulus are driving increased borrowing. The Bank of Japan’s policies are also influencing bond market dynamics.

Germany may benefit from the current bond market turmoil due to its low debt-to-GDP ratio. Despite increased stimulus and borrowing, investors have turned to German Bunds during global bond selloffs. Germany’s relatively low debt levels and growth prospects make it an attractive option for investors.



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