Overview
- Global government bond markets have moved into a sustained bear phase with German 10-year Bund yields around 3.4–3.5% and U.S. 10-year Treasury yields approaching 5%.
- Policy tightening by central banks, including a recent ECB rate rise to 2.5%, and expectations of further Fed moves have reinforced upward pressure on yields.
- Higher yields have produced substantial mark-to-market losses on older low-coupon bonds, with some German long-duration indices trading roughly a third below pandemic-era levels.
- Investors and advisers are shifting away from long fixed-rate bonds toward short-duration cash instruments, money-market and short-term ETFs, and floating-rate securities that reprice with market rates.
- Rising borrowing costs for states and companies risk weighing on growth and equity valuations if the economy weakens, and large corporate debt needs for AI and infrastructure are competing with sovereign supply for investor capital.