Although global bond markets saw a brief period of stability on Wednesday, high borrowing costs continue to fuel concerns from Japan to the UK and the US.
In Japan, the resignation of a close advisor to Prime Minister Shigeru Ishiba pushed 30-year government bond yields above 3%, hitting a record high. In the UK, 30-year bond yields reached their highest level since 1998. In France, the risk of Prime Minister François Bayrou losing a vote of confidence is increasing market tension.In the US, the 30-year Treasury yield tested the 5% level but then declined after data showing a weakening labor market. This strengthened expectations of a Fed interest rate cut.
Experts emphasize that rising interest rates increase the borrowing costs for governments, making fiscal discipline increasingly critical.
Deutsche Bank CEO Christian Sewing said, “Unless the necessary economic reforms are implemented, capital markets will continue to punish the debt burden.” Analysts say that the volatility in bond markets is rooted in high budget deficits, political uncertainties, and heavy bond selling. Investors expect borrowing pressure to increase for the remainder of the year.
