A brutal sell-off in US Treasuries accelerated on Thursday, driving 10-year yields to their highest since 2002 and pushing global government borrowing costs to multiyear highs. Yields on 10-year Treasuries climbed 0.04 percentage points to 5.34 per cent, a level last seen almost a quarter of a century ago, as traders warned the $32tn US government bond market was caught in a “vicious loop” of selling. The pressure reverberated across global markets, with 10-year gilt yields rising to 5.51 per cent, the highest since 2007, and 30-year gilt yields passing 6 per cent for the first time since 1998. Yields on 10-year Japanese debt also rose, approaching the three-decade high hit last month.
Bond markets have for months been racked by fears over higher inflation triggered by the Middle East energy shock, but traders warned forced selling added to upward pressure on Treasury yields. Mike Bell, head of market strategy at RBC Blue Bay Asset Management, said investors did not want to “catch a falling knife”, noting technical-driven selling as lots of people were getting stopped out of long positions.
European stocks dropped on Thursday morning as bonds sold off, with the Stoxx Europe 600 down 1.2 per cent. In the US, futures tracking the S&P 500 were flat and the Nasdaq 100 was on track to rally 0.6 per cent at the open. The sell-off came despite Brent crude slipping 1 per cent to $97 a barrel.
Source: Financial Times Markets · Summarized by HeadlinesBriefing