Global bond selloff deepens as long-term yields soar

A major selloff in global bonds intensified Wednesday, with long-term debt leading the declines. Yields, which move opposite to prices, surged as investors grew anxious over persistent inflation, massive government spending, and soaring debt levels.

Key developments:

• US: 30-year Treasury yields neared the critical 5% threshold.
• UK: 30-year bond yields hit 5.75%, a high not seen since 1998.
• Japan: 20-year yields climbed to their highest this century.

 

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The pressure reflects a global fear that heavy fiscal stimulus will keep inflation elevated, forcing central banks to keep rates higher for longer. This is particularly punishing for long-term bonds.

Traders are responding by betting on a “steepener” trade, which profits when the gap between long and short-term yields widens. Meanwhile, some investors are fleeing to shorter-term debt, anticipating it will hold its value better if central banks like the Fed are forced to cut rates.