Whether in the U.S., Europe, or Japan: bond yields are rising.
For instance, the U.S. Fed has reduced its key interest rate by 1 percentage point from September 2024 until today. But long-term yields have not declined, as is usually the case if the central bank cuts interest rates, but gone up.
The yield on the 10-year US Treasury bond has risen by almost a full percentage point from 3.8 to 4.7 per cent—the highest level since October 2023. And the yield on 30-year US government bonds has nearly reached 5 per cent—a record high since the spring 2007.
Why have yields gone up?
It could be that yields are rising because investors expect higher economic growth. That would be a rather positive scenario, and no cause for major concern. Or do investors perhaps fear a deterioration in the credit quality of borrowers and/or higher future inflation? In that case serious trouble would be ahead.
Because economies worldwide are highly…
