Economic news

Why global bond yields are surging

2025.01.13 06:05

Why global bond yields are surging

Investing.com — Government-bond yields in the developed world have seen a sharp increase in recent weeks, causing disturbance in the stock market and putting pressure on indebted countries.

The global bond rout could potentially hinder the actions of central banks, which have been reducing short-term interest rates. These rate cuts are intended to decrease borrowing costs for consumers and businesses.

The uptick in yields is making borrowing more expensive, leading to what Wall Street refers to as “tightening financial conditions”. The average 30-year U.S. mortgage rate increased to 6.9% last week.

According to Wall Street Journal’s analysis, analysts largely attribute the recent bond-market selloff to the U.S. yields on U.S. Treasurys, which increase when bond prices decrease, received their first significant boost in October following the release of robust monthly jobs data. This data dispelled concerns of an imminent recession.

Further contributing to the surge, Donald Trump won the U.S. presidential election, promising policies that many investors perceive as inflationary. Additionally, Federal Reserve officials altered their forecasts to fewer rate cuts in 2025.

Yields on ultrasafe government debt are primarily determined by investor expectations of what short-term interest rates will average over the lifetime of a bond. Yields on U.S. Treasurys are higher than those on German bonds due to lower rates in Europe, where the economy is weaker.

However, changes in yields typically exhibit correlation. When Treasury yields increase, investors looking for a better return may sell their German bonds to purchase U.S. Treasurys. This action can cause German bond yields to rise as well.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 84,386.61 0.04%
ethereum
Ethereum (ETH) $ 1,931.08 0.20%
tether
Tether (USDT) $ 1.00 0.00%
xrp
XRP (XRP) $ 2.39 2.53%
bnb
BNB (BNB) $ 608.16 2.64%
solana
Solana (SOL) $ 135.01 0.76%
usd-coin
USDC (USDC) $ 1.00 0.00%
cardano
Cardano (ADA) $ 0.74389 0.87%
dogecoin
Dogecoin (DOGE) $ 0.176018 1.17%
tron
TRON (TRX) $ 0.221108 0.58%
staked-ether
Lido Staked Ether (STETH) $ 1,930.34 0.24%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 84,306.59 0.12%
pi-network
Pi Network (PI) $ 1.51 5.52%
leo-token
LEO Token (LEO) $ 9.75 0.26%
chainlink
Chainlink (LINK) $ 14.09 0.05%
the-open-network
Toncoin (TON) $ 3.44 16.36%
stellar
Stellar (XLM) $ 0.275378 1.57%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,302.39 0.23%
usds
USDS (USDS) $ 1.00 0.00%
hedera-hashgraph
Hedera (HBAR) $ 0.19342 0.76%
avalanche-2
Avalanche (AVAX) $ 19.62 4.43%
shiba-inu
Shiba Inu (SHIB) $ 0.000013 1.49%
sui
Sui (SUI) $ 2.34 2.73%
litecoin
Litecoin (LTC) $ 92.37 0.60%
bitcoin-cash
Bitcoin Cash (BCH) $ 339.52 1.69%
polkadot
Polkadot (DOT) $ 4.34 1.30%
mantra-dao
MANTRA (OM) $ 6.59 3.58%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.00%
weth
WETH (WETH) $ 1,931.98 0.21%
bitget-token
Bitget Token (BGB) $ 4.45 0.42%
binance-bridged-usdt-bnb-smart-chain
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 1.00 0.03%
hyperliquid
Hyperliquid (HYPE) $ 13.91 4.04%
whitebit
WhiteBIT Coin (WBT) $ 28.86 1.39%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,050.61 0.10%
monero
Monero (XMR) $ 212.64 0.58%
uniswap
Uniswap (UNI) $ 6.24 1.71%
susds
sUSDS (SUSDS) $ 1.04 0.02%
aptos
Aptos (APT) $ 5.36 0.95%
dai
Dai (DAI) $ 0.999879 0.00%
near
NEAR Protocol (NEAR) $ 2.65 0.12%
pepe
Pepe (PEPE) $ 0.000007 0.04%
internet-computer
Internet Computer (ICP) $ 5.84 2.55%
okb
OKB (OKB) $ 46.69 1.74%
ondo-finance
Ondo (ONDO) $ 0.870721 1.04%
ethereum-classic
Ethereum Classic (ETC) $ 18.03 0.25%
mantle
Mantle (MNT) $ 0.800337 9.08%
gatechain-token
Gate (GT) $ 21.73 1.01%
aave
Aave (AAVE) $ 173.23 1.45%
coinbase-wrapped-btc
Coinbase Wrapped BTC (CBBTC) $ 84,448.63 0.12%
official-trump
Official Trump (TRUMP) $ 12.01 0.64%