Government borrowing costs rose worldwide on Thursday, despite German bond yields easing off their highest levels since 1990. Analysts attribute U.S. tariffs to the surge in global bond market fluctuations.
The yield on Germany’s 10-year debt instruments jumped by 30 basis points on Wednesday, prompting a sell-off of German bonds, which are considered a benchmark for the eurozone. However, yields began to decline after lawmakers agreed to reform historic debt policy rules allowing increased national defense spending.
Global bond markets were influenced by U.S. tariffs and Germany’s political shift, with some analysts seeing it as a “risk-on” move for European assets. Deutsche Bank strategist Jim Reid stated that markets are pricing in a once-in-a-generation policy regime shift, which has driven a huge risk-on move for European assets.
The sell-off extended to Japanese markets, where the yield on 10-year government bonds rose by 8 basis points during Thursday trading hours. Analysts warn traders should monitor Japan’s rising yields, as they could signal broader market tension.
In the U.S., the yield on the benchmark 10-year Treasury rose by 4 basis points to around 4.3148%, driven in part by concerns about Trump’s tariff wars potentially leading to inflation. Experts also point to Germany’s defense spending boost and EU’s ReArm Europe plan as key drivers behind the sell-off.
As investors await the European Central Bank’s monetary policy update, which is expected to include a quarter-point rate cut, global borrowing costs continue to fluctuate.
Source: https://www.cnbc.com/2025/03/06/bond-yields-rise-globally-german-bunds-continue-selloff.html