Overview
- Long-term government yields have climbed across the United States, Japan and the eurozone, pushing U.S. 10‑ and 30‑year Treasury yields to multi‑year highs and German 10‑year yields above recent levels.
- Investors point to rising energy costs that lifted inflation expectations and to policy rate hikes by the Federal Reserve and the European Central Bank as the main drivers of the selloff in bond markets.
- Higher yields raise borrowing costs for heavily indebted governments and widen sovereign spreads, with the gap between German and French 10‑year yields now at its widest level since the euro crisis.
- The repricing is lowering prices of existing bonds and hurting bond funds and ETFs, reducing the perceived safety of those holdings for conservative portfolios.
- Hundreds of thousands of German homeowners whose low-rate mortgages are expiring face much higher renewal offers and advisers recommend comparing offers, getting new valuations, raising repayment rates or using forward loans.