Long-term global bond yields hit 20-year highs

Global long-term government bond markets are witnessing a broad sell-off that has pushed yields to levels not seen since the global financial crisis, amid warnings from analysts that losses may continue in the near term.

Rising global inflation expectations — driven by higher oil prices due to disruptions in the Strait of Hormuz linked to the war in Iran — have pushed the Bloomberg index measuring the average yield on sovereign debt with maturities of 10 years or more to its highest level since July 2008.

Experts attribute this shift in pricing to several overlapping factors, most notably countries’ fiscal positions, persistent inflation risks, political uncertainty, and increasing investor demand for higher risk premiums.

Patrick Coughlin, head of research at London-based Barclays, believes that the reopening of the Strait of Hormuz is the only catalyst currently capable of reversing the ongoing selling trend.

US 30-year Treasury yields have jumped by about 60 basis points since the outbreak of the war in Iran, touching their highest level since July 2007.

Meanwhile, comparable UK government debt has reached its highest level since 1998, amid a political crisis weighing on the government bond market, surpassing Australia to record the highest yield among developed markets.