Bond crisis worsens! US 30-year Treasury yields surge to highest level since 2004. What lies ahead?
The US bond selloff intensified as the 30-year Treasury yield hit its highest level since 2004, while the 10-year yield reached a post-financial-crisis high. Strong US economic data, rising inflation concerns, elevated government debt and higher oil prices have fuelled expectations of further Federal Reserve rate hikes, pressuring global bond markets.
The bond crisis has worsened, with US 30-year Treasury yields reaching their highest level since 2004 due to strong US growth and rising inflation. The 10-year US Treasury yield hit a new post-financial-crisis high, and the two-year bond yield surpassed 4.9%. The surge in yields reflects falling bond prices as bond prices move inversely to yields.
The S&P Global services PMI rose to its highest reading in nearly five years, indicating strong manufacturing activity. Fed funds futures traders are pricing in a 66% chance of an October rate hike, up from 53% earlier. The bond selloff was not limited to the US, as Japan's 10-year bond yield and Indian government bonds also soared sharply.
Strong PMI data and a weak US government bond sale have compounded the global rout, setting the stage for a rise in long-term interest rates, according to AXA's Chief Economist Gilles Moec. The analyst highlighted high inflation, hawkish central banker messages, competition from the tech sector, and the geopolitical issue in the Middle East as factors contributing to the angst in the bond market.
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