A cruel quarter for bonds
TLT•Bond markets are on course for a brutal quarter as inflation and fiscal concerns push yields higher. The 10-year U.S. Treasury yield has risen 81 basis points in July-September, while Japan’s 10-year yield is up 42 basis points.
1. Yields climb sharply
The 10-year U.S. Treasury yield has risen 81 basis points in the July-September quarter, its steepest quarterly rise since 2022, and borrowing costs are at a 19-year peak. Japan’s 10-year bond yield is up 42 basis points, on course for its largest quarterly rise in more than two decades.
2. Investors weigh rate risks
Inflation risks linked to the seven-month-long war in the Middle East have heightened concerns about worsening fiscal health globally. A hawkish shift by major central banks in September has led investors to position for interest rates staying higher for longer. Some investors see government bonds as attractive again, while others remain cautious about long-dated bonds because of high government debt.
3. Economic data ahead
Stocks have largely shrugged off higher yields as investors pin their hopes on AI, though the investment needed for AI infrastructure is making some investors nervous. Wednesday’s scheduled data include German retail sales, UK second-quarter GDP, and September CPI figures for France and Germany. October will bring U.S. jobs and inflation data, French budget talks, a UK budget and likely more bond issuance from tech firms.
