Global Bonds: Selloff deepens with rising term premia – BBH
Brown Brothers Harriman’s Elias Haddad highlights a deepening global bond market selloff driven by tighter expected policy paths and rising real term premia.
Brown Brothers Harriman’s Elias Haddad reports a deepening global bond market selloff, attributed to tighter expected policy paths and rising real term premia. The Bank of International Settlement (BIS) analysis attributes the trend to crowding-out effects from large tech bond issuances and sovereign debt sustainability concerns.
The upward trajectory in long-term bond yields is driven by a tighter policy outlook and heightened real term premia, which compensate investors for holding longer-term bonds, with inflation expectations remaining well anchored. BIS notes the rise in real term premia may be influenced by tech firms’ increasing bond issuance and sovereign debt sustainability worries.
France's plan to issue a record amount of bonds next year underscores the broader challenge for heavily indebted governments, as higher debt servicing costs intensify fiscal pressures. Meanwhile, AUD/USD consolidates near a two-month low, with USD/JPY at the upper end of its weekly range above 158.00, despite softer US PCE data and oil-driven inflation risks supporting elevated US bond yields.
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