Global Bond Selloff Pushes US Yields to Highest Since 2004

• Long-term Treasury borrowing costs spike as sticky inflation dims rate-cut hopes
• Japan’s benchmark hits 1996 peak; US and China extend trade truce to January

A worldwide rout in sovereign fixed-income markets pushed US benchmark borrowing costs to their highest levels in more than two decades, as resilient economic indicators and persistent price pressures forced investors to sharply reprice the trajectory of global monetary policy.

The global bond retreat gathered momentum following strong September purchasing managers’ indexes across major developed economies, which signaled durable demand alongside entrenched input costs.

The selloff sent the US 30-year Treasury yield up to 5.44%, while the 10-year benchmark climbed to 5.13%, marking levels unseen since 2004. In Tokyo, Japanese government bond yields surged to their highest mark since 1996 as domestic financial markets reopened following a three-day holiday weekend.

Hawkish Central Bank Chorus

Policymakers across major jurisdictions underscored the uphill battle against price pressures, reinforcing expectations that borrowing costs will remain restrictive for longer:

• United States: New York Federal Reserve President John Williams warned that further efforts are required to return inflation sustainably to the central bank’s target, dimming hopes for near-term policy easing.
• Eurozone: European Central Bank Executive Board member Isabel Schnabel cautioned that the energy shock has proven far more persistent than initially anticipated. Meanwhile, Germany’s leading economic institutes doubled their 2026 gross domestic product growth forecast to 1.3% from the 0.6% projected in spring, reflecting an improving outlook in the region’s primary economy.
• Sweden: The Riksbank held its benchmark policy rate steady, keeping the door open for potential policy action at its December gathering.

US-China Truce, Record Green Debt

Bilateral ties between Washington and Beijing offered a pocket of stability as US President Donald Trump and Chinese President Xi Jinping met for high-stakes discussions. US Treasury Secretary Scott Bessent announced that both nations agreed to extend their bilateral trade truce through Jan. 10, deferring the threat of immediate tariff escalations.

In primary debt markets, Hong Kong launched a landmark offering, seeking to raise as much as $2.6 billion via a multicurrency digital green bond. If completed, the transaction will stand as the largest issuance of its kind globally.

Market Wrap

Surging sovereign yields and renewed energy-driven inflation weighed heavily on global equities and risk assets:

• Equities: European shares, Japan’s Nikkei, and Hong Kong’s Hang Seng Index traded slightly lower, while mainland Chinese equities tumbled 1.5%. Wall Street futures signaled an opening drop of roughly 1%.
• Commodities: Brent crude rallied 1.5% to $105 a barrel, reversing its recent decline and injecting fresh price volatility into transport and manufacturing chains.