The pros said “let the bond market speak.” But investors aren’t pleased with what it’s signaling on Tuesday. After an atypical Treasury Department move in August failed to calm bond‑market nerves, U.S. Treasury yields are climbing again, and the sell‑off is spreading beyond America. A wave of macroeconomic worries is sweeping through global fixed income, pushing government‑bond yields higher from the United Kingdom to Germany to Japan.
Here were the notable shifts in global yields on Tuesday:
– US 10-year Treasury: 4.78% (+2 bps) — highest since Jan. 2025
– US 30-year Treasury: 5.27% (+2 bps)
– UK 10-year bond: 5.21% (+5 bps)
– UK 30-year bond: 5.86% (+7 bps) — highest since 1998
– German 10-year bond: 3.33% (+1 bps)
– Japan 10-year bond: 2.99% (+4 bps) — highest since 1996
– Japan 30-year bond: 4.19% (+5 bps)
The 10‑year Treasury yield reached its highest point since 2025, and the impact is already showing up in consumer‑lending sectors such as mortgages. The 30‑year mortgage rate has risen more than 11 basis points since last Thursday, now sitting at 6.77% this week.
Following Kevin Warsh’s Jackson Hole speech last Friday, traders had already increased the likelihood of a Fed rate hike this month. On Tuesday, that probability climbed further, reaching nearly 70% for a 25‑basis‑point increase to the Fed’s short‑term borrowing rate when policymakers meet on September 15‑16.
Fed Governor Michael Barr added his voice to the higher‑rate discussion on Tuesday. He said he would back a rate increase if inflation does not retreat toward the Fed’s 2% goal. “If inflation shows no sign of sufficient moderation, I believe we should act decisively to raise rates,” he remarked in prepared comments.
In Japan, the 10‑year government bond posted its highest yield since 1996. The fresh spike in volatility came after remarks from Treasury Secretary Scott Bessent hinted that Japan could do more to support its currency, stoking fears of a rate hike by the Bank of Japan.
U.S. equities fell amid the bond sell‑off, yet some contend that investors need not panic over the bond rout, arguing that the underlying fundamentals for stocks remain solid as earnings and economic activity stay resilient.
“We do not anticipate that rising bond yields will undermine what we continue to see as a supportive environment for equities,” said Brock Weimer, an analyst at Edward Jones, on Tuesday. “Accordingly, we suggest investors consider weighting stocks more heavily than bonds.”
At the closing bell, major indexes stood as follows:
– S&P 500: 7,631.47, down 0.71%
– Dow Jones Industrial Average: 52,766.88, down 0.79% (-419.02 points)
– Nasdaq 100: 29,077.22, down 1.29%
Tuesday’s bond movements largely reflect worries about rising global inflation and deteriorating fiscal conditions for many governments, which are financing themselves with additional debt and larger deficits. In Japan, Prime Minister Sanae Takaichi’s push for extra fiscal stimulus to spur the economy has raised investor concerns. In Europe, too, elevated borrowing and growing deficits are under scrutiny after years of geopolitical turmoil have driven spending upward across numerous nations.
In the United States, the Iran conflict returned to the spotlight after renewed strikes by both sides over the weekend pushed oil prices higher and revived fears of persistent inflation. Treasury Secretary Scott Bessent’s announcement last month that the U.S. would increase its bond purchases to curb long‑end yields unsettled investors already anxious about the government’s capacity to curb borrowing and improve its fiscal outlook.
Meanwhile, a surge in corporate borrowing—especially by firms financing large AI initiatives—is exerting pressure on government bonds. Investment‑grade corporate issuance has surged this year, giving investors exposure to a popular investment theme that some argue is crowding out U.S. Treasuries.
According to SIFMA data, U.S. corporate bond issuance reached $1.68 trillion year‑to‑date through July, up 27% compared with the prior year. Bank of America forecasts that companies will issue $190 billion of investment‑grade bonds this month, up from $164 billion in August.