Top Factors Behind Global Bond Rebounds
Global bond markets are experiencing a noticeable increase in yields, reaching historic levels amid worsening economic outlooks and rising inflation. This occurs despite the growth of the U.S. economy, ongoing tensions with Iran, and rising borrowing costs. As a result, the yield on the 10-year U.S. Treasury bond has risen to its highest level since 2007, with projections indicating that the 30-year U.S. bond yield could reach 6% by the end of 2026. Borrowing costs in countries such as Japan and France have also hit new highs. Since the beginning of the year, global bonds have lost 2.7%, compared to a 13% increase in stocks. The rise in yields is driven by several factors, including continued economic growth, soaring commodity prices, interest rate hikes by central banks, corporate borrowing in the technology sector, budget deficits and government debt, increased military spending, interventions in the Japanese market, trade wars, and shifts in the bond buyer base. This has coincided with a decline in the global savings surplus, intensifying competition for capital and pushing bond yields higher, which in turn raises borrowing costs and exerts pressure on markets.
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