Global bond markets sold off for a second straight week, with U.S. and European yields pushing back toward multi-decade highs even after Treasury Secretary Scott Bessent tried to talk the market down. Traders now look to Jackson Hole for signs of whether central banks will tolerate the higher borrowing costs.
Global fixed-income markets booked a second consecutive week of losses, as verbal intervention from Washington failed to ease investor anxiety over widening fiscal deficits, hawkish central bank paths, and sticky energy costs. Bessent tried to calm sovereign debt desks by arguing that yields do not reflect underlying fundamentals, and by suggesting the government could expand its bond buybacks beyond the newly announced $4 billion per-issue ceiling. Yet even after the Treasury formally doubled its long-end liquidity support, traders kept selling sovereign paper.
European yields notch second consecutive week of gains
European debt hubs led the weekly selloff on sticky regional inflation and heavy primary supply. The German 10-year bund yield advanced to 3.254% on Friday, a second straight weekly gain that keeps it near its highest level since May 2011. The German 2-year schatz yield rose to 2.841%, also its second weekly advance, as money markets priced higher odds of a September rate hike by the European Central Bank. The French 10-year OAT yield settled near 4.10% after a heavy slate of government debt reopenings tested demand.
US rates pivot back toward multi-decade peaks
U.S. Treasuries mirrored the European selloff, erasing most of the tactical gains triggered by the Treasury's initial buyback announcement. The 10-year Treasury yield climbed back toward 4.70%. The 30-year yield hovered near 5.25%, reapproaching its 19-year high of 5.337% set earlier in the week. Official data confirmed that total U.S. gross national debt surpassed $40 trillion for the first time. Bessent dismissed the milestone, saying there is "nothing magic" about the figure and arguing the country can grow its way out of the deficit. Bondholders, though, continue to demand a higher term premium to absorb the debt load.
Geopolitical energy friction keeps pressure on
The selloff also runs through the Middle East, where Brent crude has held near $93 a barrel following threats of historic economic sanctions against Tehran from President Trump, keeping commercial tanker traffic through the Strait of Hormuz severely depressed.
With energy flows constrained and fiscal borrowing expanding, sovereign debt desks are entering the weekend on a defensive footing.
Source: Investing.com
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