On Tuesday, government bond yields experienced significant increases, with the U.S. 10-year Treasury note yield reaching a 20-month high of 4.7880%. In Japan, the benchmark 10-year note yield rose over 6 basis points, marking its first move above 3% since 1996, while the 2-year yield hit a 31-year high of 1.81%.
The U.K. also saw its 10-year Gilt yield rise more than 9 basis points to 5.2341%, the highest since June 2008, and the 30-year Gilt yield reached 5.8856%, the highest since March 1998. The increases in yields were attributed to rising inflation fears following retaliatory strikes between the U.S. and Iran, which have driven energy prices higher, with Brent crude rising 2.2% to $92.38 per barrel.
Treasury Secretary Scott Bessent downplayed concerns about rising U.S. yields, asserting that the U.S. bond market remains the best performing globally, despite Fitch Ratings reaffirming its AA+ rating. However, analysts like Steve Englander from Standard Chartered expressed skepticism, noting that the U.S. faces a deficit problem similar to other countries.
In the U.K., Prime Minister Andy Burnham is reportedly considering legislation to increase public control over struggling utilities, which may further influence bond yields. The rise in yields reflects broader economic pressures and could affect investor sentiment and market dynamics moving forward