Today, the bond market saw a clear global convergence: Japan's 40-year yield rose to 4.205%, and the 10-year yield briefly reached 2.945%, a new high since 1996; Germany's 10-year yield rose to 3.2231%, a new high since 2011; the US 30-year yield also briefly touched 5.321%, the highest since 2007. The most direct catalyst was the renewed tensions following the expiration of the US-Iran ceasefire, with Brent crude oil rising to around $91, and the market reassessing medium- to long-term energy inflation risks.
However, the probability of a Fed rate hike in September actually fell from 52% a week ago to about 35%, while long-term bond yields continued to reach new highs. This indicates that the current long-term sell-off cannot be simply explained by "central banks raising rates again," and the market is increasing the term premium required for holding long-term bonds. Japan and Europe do indeed face more direct pressure to raise rates—expectations for a Bank of Japan rate hike in September are rising, and 83% of economists surveyed by Reuters expect the European Central Bank to raise rates again in September—but the common global problem is long-term inflation and bond supply. According to Reuters analysis, the deeper underlying factor is that global capital is becoming increasingly expensive. The US fiscal deficit remains around 6% of GDP, and AI giants have already issued nearly $220 billion in bonds this year. Germany has also moved away from past fiscal austerity measures, with new debt exceeding €180 billion by 2026 and a significant increase in defense and infrastructure financing. Meanwhile, central banks are no longer absorbing large amounts of long-term government bonds as they did during the QE era; investors are willing to accept the increasing duration supply only at higher yields.
