Global Sovereign Debt Sell-Off in Focus: Bernett's Firefighting Efforts Nullified, US Bond Yields Surge, Sovereign Bonds of Several Countries Repriced

BlockBeats News, September 2nd: Following the announcement of an expanded U.S. debt buyback plan by Treasury Secretary Benson on August 19th, long-term bond yields briefly fell but quickly rebounded. As of now, the 30-year Treasury bond yield has risen to 5.27%, returning to pre-announcement levels; the 10-year yield is hovering around 4.8%, reaching the highest level since January 2025, up over 10 basis points from that time; the two-year yield has risen to 4.40%, and the market has priced in a probability of approximately 70% for a Fed rate hike this month.

Mark Cabana, head of U.S. interest rate strategy at Bank of America, pointed out that the interest rate market has never been able to sustain a decent downward trend in yields, as investors demand a higher premium to extend their duration. Secretary Benson himself is not concerned about the rise in yields, stating in an interview with CNBC that "the market is the market," but Dan Morehead, founder of Pantera, bluntly stated that bluffing can work, provided that no one at the table knows you are bluffing.

The global bond market is undergoing a synchronous sell-off. Japan's 10-year government bond yield touched 3% for the first time since 1996, the UK's 30-year yield rose to the highest level since 1998, Germany's 30-year yield hit the highest level since 2011, and the Bloomberg Global Sovereign Bond Index yield rose to a nearly 20-year high. Oil prices have risen by about 13% over the past month to $94, the Middle East situation remains unsettled, and investors are increasing their predictions for rate hikes by the ECB, BOJ, and RBA. The trend of Japan's 10-year yield, rising from about 2% in January to 3%, has been particularly dramatic, further exacerbating the debt refinancing pressure from Prime Minister Hayashi Wazana's fiscal expansion. Florian Ielpo, portfolio manager at Lombard Odier, noted that with rising bond yields, the relative attractiveness of fixed income versus stocks is increasing, and asset allocation decisions are beginning to change. This global repricing of sovereign debt is raising the cost of financing at all levels, from the U.S. government to ordinary homebuyers and credit card holders.