Yields on the longest-dated US government bonds have climbed to their highest level in more than two decades, the latest milestone in a global selloff driven by inflation concerns and pressure from government debt burdens.
Oil prices jumped again on Thursday, pushing yields on US Treasuries maturing in five to 30 years to multi-year highs during intraday trading. The 30-year Treasury yield rose as much as 6 basis points to 5.46%, the highest since 2004.
European government bond yields also broadly moved higher, while Japanese government bond yields touched levels last seen in 1996 when trading resumed after a three-day closure. Rising borrowing costs weighed on global stock markets.
The Bloomberg Global Aggregate Treasury Index shows that the average yield on global government debt is now close to 4%, the highest since 2007. This serves as another reminder that the era of low yields has ended, with markets grappling with the inflation shock from the Iran war, the strength of the US economy, and a flood of bond issuance from governments and technology companies.
Dave Aspell, co-chief investment officer at Mount Lucas Management LP, said: "Such a move in the bond market is very rare." He is currently shorting 10-year government bonds of the UK, Germany, Canada, Japan, and the US. He added: "The Federal Reserve is raising rates again, and inflation is clearly not hitting target. The economy is holding up reasonably well, and government spending is massive."
Eaton Vance Municipal Bond Fund (EIM) is among the fixed-income products that may be affected by the broader shift in global bond markets.
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