A global sell-off in government bonds intensified on Thursday as the yield on 10-year U.S. Treasury notes reached its highest level since 2002, further driving up borrowing costs around the world. Yields climbed to new highs while oil prices rose, even as more oil is flowing from the Middle East than at any point since the start of the war with Iran. The price of Brent crude, the international benchmark, rose above $100 a barrel. The 10-year U.S. Treasury yield, which underpins corporate and consumer borrowing costs across the globe, reached as high as 5.34 percent.
Among the causes are investor concerns about the impact of the war with Iran, high inflation and heavy public debt loads. Markets are “very nervous” following long-running concerns about public debt, said Mahmood Pradhan, a nonresident fellow at Bruegel, and former deputy director of the European department at the International Monetary Fund. “The Middle East war has really turned everything around,” he said.
Though bond prices fluctuated on Thursday, the trends pushing up yields are unlikely to dissipate soon, analysts warn. Central bankers are increasingly alert to the threat that inflation could stay above their targets for too long. Last month, the Federal Reserve, European Central Bank and Bank of Japan increased rates and traders expect them to do so again this year. In Europe, attention has turned to France, which is trying to pass a budget that will slightly reduce its deficit.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing