Global bond yields climb to levels last seen around 2008

Government bond yields across the large economies moved together on 1 and 2 September in a way markets have not seen since the years around the 2008 crash. A Bloomberg index of sovereign yields printed 3.72 percent, its highest reading since mid-2008, after four sessions of losses in bond prices.

The United States 10-year Treasury yield rose to about 4.81 percent on Wednesday morning in Asia, the highest since 2023 on some screens and the highest since January 2025 on others. The 30-year yield sat near 5.27 percent. It has now closed above 5 percent on 55 sessions this year, the most such closes in a calendar year since 2006. The two-year note was around 4.36 percent.

Japan's 10-year government bond yield crossed 3 percent for the first time since 1996. The two-year JGB was near 1.8 percent, a 31-year high. The 30-year JGB yielded more than 4.2 percent, a record. Australian 10-year yields reached 5.198 percent, a 15-year high. Germany's 10-year Bund yield was about 3.35 to 3.36 percent, last seen in 2011. The United Kingdom 10-year gilt was near 5.25 percent, a 2008 level, while the 30-year gilt traded around 5.9 percent, last visited in 1998.

Those numbers matter because sovereign yields set the floor for almost every other loan. The US 30-year mortgage rate has moved toward 6.7 percent. Student loans, car loans, credit cards, corporate bonds and emerging-market debt reprice off the same curve. Charu Chanana at Saxo said buyers now want a larger premium for inflation, fiscal risk and the volume of paper coming to market, and that 5 percent on the US 10-year looks plausible before demand returns.

Oil, Warsh and a crowded calendar

Two forces sit behind the move. The first is oil. Fresh US strikes on Iranian targets and tanker attacks in the Strait of Hormuz pushed Brent toward $92 to $96 a barrel, depending on the session, roughly 30 percent above the price before the current war. Eurostat later showed euro-area energy inflation at 14.3 percent in August. Markets assigned about a two-thirds to three-quarters chance of a mid-September Federal Reserve rate increase and fully priced a 25-basis-point European Central Bank rise on 10 September.

The second force is supply. Governments are running large deficits. Technology companies are also issuing large amounts of debt to build data centres. The US Treasury is expected to face about $215 billion of corporate issuance in September after a record August. Treasury Secretary Scott Bessent last month expanded buybacks of older bonds to contain yields. Those purchases are now being tested against the new supply.

Fed Chair Kevin Warsh spent Friday repeating that the central bank intends to bring inflation down. That remark started the latest leg of the selloff. Real yields, not only headline inflation, have done much of the work on the long end of the US curve.

What governments can still do

Bessent has said public worry about debt and yields underplays the strength of the US economy. That argument has not stopped the 30-year bond from entering September on its weakest stretch since 2006. Japan's higher yields also change a global funding habit. For three decades Japanese investors recycled cheap domestic savings into Treasuries, gilts and Australian bonds. A 3 percent JGB gives them a reason to stay home.

The same week, Indian equities sold off more than 700 Sensex points as Brent jumped and the US 10-year touched 4.79 percent. The rupee opened near 94.92 per dollar. The transmission is mechanical. When the risk-free rate rises in New York, Tokyo and Frankfurt, the discount rate on every other asset rises with it.

A G7 average yield tracked by Bloomberg is now the highest since September 2000. That is a different era of public finance. Debt-to-GDP ratios are far higher than they were then. Interest bills will eat a larger share of tax receipts if these levels hold through the autumn refunding calendar.

The open question is not whether yields can fall on a quiet news day. It is whether any large issuer can fund the next decade at the rates that prevailed from 2010 to 2021. This week's tape says the market no longer believes those rates are the baseline.