Latest: Britain joined the global bond selloff on Thursday. The 10-year gilt yield rose to a 19-year high, while 20- and 30-year gilt yields hit their highest since early 1998 at 6.00 and 6.05 percent respectively, Reuters reported. The trigger was energy: Brent crude jumped 5 percent to $105 a barrel, its highest since September 29, as the Iran war and the Gulf tanker campaign keep supply risk priced in.
Wednesday’s selloff was the resumption of the global bond rout that has defined the autumn. The 10-year Treasury yield rose to a 24-year peak of 5.364 percent and the 30-year touched a fresh 24-year high, its highest since 2002 per the Financial Times, before the strong $39 billion 10-year auction knocked them back about 5bp. In afternoon trading the 10-year settled up 1.3bp at 5.284 percent and the 30-year up 2.8bp at 5.669 percent, per Reuters. Thursday morning the 10-year stood at 5.28 percent (up 0.8bp on the day) and the 30-year at 5.66 percent (up 2.0bp), with the auction relief already fading. Danske Bank analysts see a risk of both the 10- and 30-year reaching 6 percent as investors demand more long-end premium, citing not only Treasury supply but also the hyperscalers: Reuters reported SpaceX is seeking about $40 billion in financing for Nvidia chip purchases, and strategists say AI-infrastructure debt issuance is competing directly with sovereign paper for duration demand.
Europe is moving in lockstep. The 10-year German Bund yield reached 3.633 percent on October 1, its highest since mid-2009, while the 10-year OAT-Bund spread hit 132bp that day, a 14-year high, as France’s budget drama made it the epicenter of the European selloff, per Dow Jones. Dow Jones’ Emese Bartha notes investors remain focused on inflation, fiscal deficits, Treasury supply and term premium, with one strategist calling the regime “much higher for a lot longer” rather than merely higher for longer.
The FOMC minutes give the fundamental cover: nominal yields rose about 35bp across the 2- to 10-year segment over the intermeeting period, driven partly by a higher expected policy path but also by geopolitics, the Treasury’s buyback program mechanics, and competition for capital from private AI debt. Inflation compensation drove the short-end move; higher real rates drove the long end. That split is why the front end can price hikes while the long end keeps marching on supply.