Average yields on the Bloomberg Global Treasury Index climbed to 3.68%, the highest level since the 2008 global financial crisis, days before rate decisions from the Federal Reserve, Bank of Japan, and Bank of England. Strong US employment and growth data flipped rate expectations from cuts to possible hikes. The index is heading for its biggest monthly drop since March, challenging hopes that the worst of this year's bond rout has passed.
Bloomberg Global Treasury Index Reaches 3.68% Yield
The Bloomberg Global Treasury Index tracks government debt from investment-grade countries. US 30-year Treasury yields trade just below their highest level since 2007. UK gilts have logged their longest streak of daily closes above 5% in almost two decades, according to Bloomberg.
Germany's 10-year yield has reached its highest point since 2011. Japan's 40-year yield moved above 4%, and its five-year yield hit a record since the maturity launched in 2000. Australia now carries the highest benchmark yields in the developed world.
Bond prices fall when yields rise. BlackRock's iShares 20+ Year Treasury Bond ETF fell almost 5% in one month. The fund has lost more than half its value since 2020, while the global benchmark sits roughly 20% below its early-2021 peak.
US Employment Data Shifts Rate Expectations
Traders assign roughly a one-in-three probability to a hike at the July 28-29 meeting, where a split among 104 economists shows how uncertain the path remains. Fed Chairman Kevin Warsh has cut back on forward guidance. The ICE BofA MOVE Index, which measures bond market volatility, hit a two-month high on Thursday.
Bank of America said less guidance lets markets price the action they believe the Fed should take. Barclays warned that a hike, or a poorly explained hold, could push parts of the curve higher.
Brent crude broke above $100 on Thursday, reviving inflation fears, before it fell 7% on Sunday after Iran signaled a pause. Gold climbed above $4,100.
Bitcoin Holds Near $65,157 Amid Bond Selloff
Higher government bond yields raise the risk-free rate that every other asset must beat. Moody's believes markets may have entered a period of structurally higher inflation, higher rates, and wider fiscal deficits.
Bitcoin (BTC) has held firm, trading near $65,157, up 1.3% over the past day. Wednesday's Fed decision will show whether bond markets have priced policy correctly, or whether yields have further to climb.
FAQ
What level did the Bloomberg Global Treasury Index reach?
Average yields on the Bloomberg Global Treasury Index climbed to 3.68%, the highest level since the 2008 global financial crisis.
When is the Federal Reserve rate decision scheduled?
The Federal Reserve rate decision is scheduled for July 28-29. Traders assign roughly a one-in-three probability to a hike at this meeting.
How did Bitcoin perform during the bond selloff?
Bitcoin traded near $65,157, up 1.3% over the past day, holding firm despite higher government bond yields raising the risk-free rate.
