Government bonds worldwide fell sharply on Tuesday as trade tensions between the U.S. and the EU, along with rising debt concerns, spooked investors. U.S. Treasury yields surged, with the 30-year hitting 4.93%. The 10-year bond yields hit 4.291% as the U.S. president threatened tariffs on European goods.
The situation in Europe is the same. German 10-year bond yields rose to 2.883%, while in the U.K., bond yields reached 5.253%, which is the highest level among G7 countries. Japanese bonds also tumbled, with the 40-year yield rising to 4.213% amid concerns over fiscal policy and the government’s proposed tax cuts.
Analysts cited global deficits, high government debt, and geopolitical risks, including the possibility of trade wars between the U.S. and the EU, as driving factors putting pressure on bonds. Japan’s reduced appetite for U.S. Treasuries could further pressure yields abroad. Global debt remains over 235% of world GDP, which keeps bond markets vulnerable to fiscal and geopolitical developments.
