"Sell-off of tech stocks" dominates the headlines, but the long bond storm is being overlooked
As the sell-off of U.S. tech stocks becomes the focus, the bond market is facing pressure that has gone unnoticed. The yields on 30-year government bonds in Germany and France have risen to their highest levels since 2011, while Japanese government bond yields have also reached multi-year highs. Rising debt levels are prompting governments to issue more bonds, with some countries like Japan needing to raise interest rates, while the U.S. and the U.K. are facing inflationary pressures. The bond sell-off may signal a rebound in supply in September
As the sell-off of U.S. tech stocks makes headlines, the pressure facing the bond market has gone largely unnoticed.
Last week, the yields on 30-year German and French government bonds rose to their highest levels since 2011, Japanese government bond yields reached their highest levels in years, long-term UK bonds were sold off again, and U.S. 30-year government bond yields hovered around 5%.
Of course, the reasons behind the sell-off are evident: rising debt levels mean that governments need to issue more bonds. Some countries, like Japan, need to raise interest rates; while others, like the U.S. and the UK, face ongoing inflationary pressures.
Some believe that those "quick money" individuals may be starting to prepare for a crisis. The persistent selling pressure on bonds itself is causing concern for governments that are currently allocating a significant portion of their income to debt repayment.
This sell-off may signal a rebound in supply in September.
