Overview
- Ten-year US Treasury yields climbed to about 5.34 percent on Thursday, the highest level since 2002, while German 10-year Bunds reached roughly 3.6–3.65 percent.
- Markets blame an Iran-related oil shock that lifted inflation expectations and triggered broad selling of fixed-rate paper, a move that was amplified by large planned sovereign issuance and heavy corporate borrowing for AI and infrastructure.
- Higher sovereign yields are raising borrowing costs for households and firms, with German mortgage rates climbing to around 4–4.55 percent and many borrowers facing materially higher monthly payments.
- Open-ended German real-estate funds are under fresh pressure, with net outflows in 2026 and several funds suspending redemptions or entering liquidation while managers prepare liquidity tools to limit withdrawals.
- The repricing forces investors to reassess allocations as high-quality bonds again compete with stocks for income, and policymakers must weigh fiscal strain from rising debt-servicing costs against limited central-bank options to cap spreads.