From Bloomberg, August 18:
Everything from inflation to the AI boom is pushing borrowing costs higher.
Market data as of 06:18 AM ET. Data is subject to provider delays.
Five things you need to know
- Stocks fell as bond yields pushed further into multidecade highs and oil prices extended their climb, draining traders’ appetite for risky assets.
- Bullish global investors have ramped up their stock holdings to the highest in almost five years, leaving no room for pessimists, according to Bank of America.
- Donald Trump said he won’t try to revive a defunct truce with Iran, leaving the conflict in the Middle East in limbo.
- Meta heads to court today for a showdown with state attorneys general over claims that the company deliberately designed Facebook and Instagram to encourage compulsive use among young users.
- UK employers shed more workers in July and job vacancies hit a fresh five-year low as demand for staff remained tepid.
Global bond angst
Longer-maturity bonds are at the epicenter of investor angst about everything from inflation to the debt-laden AI boom — and governments are paying the price.
Sovereign borrowing rates are surging around the world. Yields on 30-year US Treasuries rose to the highest since 2007 this week, while French borrowing costs hit the loftiest since 2008 and their German peers traded at 2011 levels. Equivalent yields are approaching 6% in the UK and similar-maturity Japanese ones are close to their all-time high.
Setting aside domestic factors, investors are fretting about the risks of persistent inflation, profligate governments and changes in market structure and demographics that are weighing on demand for bonds.
It’s a maelstrom for finance ministers, many of whom are shifting their debt-issuance toward shorter tenors where yields are lower. There’s only so much room for maneuver, though, as they adjust to a world where they can no longer lock in financing costs for decades at rock-bottom rates.
In US Treasuries specifically, investors are becoming more concerned about the surge in borrowing by hyperscalers, said strategist Ed Yardeni. They’re also questioning whether the Fed will remain vigilant on inflation if oil prices climb again, he says....
....MUCH MORE
Also at Bloomberg:
Yardeni Says Not Pushing Panic Button on Bond Yields Yet
