— Global bond markets from Tokyo to London showed some calm after a sharp selloff on Wednesday, but long-dated yields stayed near multi-year highs as investors reacted to renewed fiscal worries in Japan, Britain, France and the United States.
Key takeaways
- Japan’s 30-year government bond yield rose to a record above 3% after a senior aide to Prime Minister Shigeru Ishiba said he planned to resign.
- UK 30-year gilt yields briefly hit about 5.75%, their highest since 1998, before easing later in the session.
- French 30-year borrowing costs remained close to their highest levels since 2009; German long yields were near 14-year peaks.
- U.S. 30-year Treasury yields touched the 5% level for the first time since mid-July amid concerns about tariffs, fiscal deficits and Fed independence.
- Investors pointed to political and fiscal risks—rather than only technical factors or a single central bank move—as drivers of the selloff.
- Heavy bond sales in Europe and shifts in expectations for U.S. rate cuts amplified pressure on long-dated securities.
Verified facts
Japanese markets reacted after a close aide to Prime Minister Shigeru Ishiba signalled an intended resignation, reviving worries about Japan’s fiscal trajectory and sending the 30-year JGB yield above 3%, a new high. The move fed into global risk pricing for long-duration debt.
In the United Kingdom, 30-year gilt yields briefly reached roughly 5.75%, their strongest level since 1998, as investors weighed Britain’s high debt and subdued growth outlook. Prime Minister Keir Starmer’s reshuffle of top advisers earlier in the week renewed scrutiny of the government’s fiscal plans. The government said it will deliver its budget on November 26.
France’s 30-year yields remained near highs not seen since 2009 amid political uncertainty: Prime Minister Francois Bayrou faces an expected confidence vote on Sept. 8 after proposing a debt-reduction package that has drawn opposition. German long yields also sat close to peaks last seen about 14 years ago.
The U.S. Treasury market saw pressure as well, with the 30-year yield touching the psychologically watched 5% level. Analysts cited concerns including possible loss of tariff revenue if trade measures are ruled illegal, questions about Federal Reserve independence, and a heavy supply of bonds being issued globally.
Context & impact
Rising long-term yields increase government debt-servicing costs at a time when many issuers plan further issuance, complicating budget plans and potentially forcing policy trade-offs between fiscal consolidation and growth support.
Higher sovereign yields also set the tone for mortgage rates and corporate borrowing costs, squeezing households and firms and possibly slowing economic activity if elevated rates persist.
Investor demand for ultra-long paper has weakened, with some institutional buyers pulling back. That change in appetite can magnify price moves when governments sell large volumes of long-dated bonds, as seen in a heavy issuance period in Europe earlier this week.
“The market is signaling that political and fiscal reforms are needed; these moves are a warning, not just a technical adjustment.”
Christian Sewing, Deutsche Bank (paraphrased)
“While 30-year yields have risen, it is important not to overstate their immediate funding role given current issuance patterns.”
Andrew Bailey, Bank of England (paraphrased)
Unconfirmed
- Whether the aide’s intended resignation in Japan will lead to immediate policy shifts or broader cabinet changes is still unclear.
- The exact market impact if France’s expected Sept. 8 confidence vote goes as forecast remains conditional on the government’s next steps.
- Legal rulings on tariffs and the scale of any lost revenue for the U.S. government are unresolved and could alter Treasury market dynamics.
Bottom line: Markets are pricing higher long-term borrowing costs across major economies as fiscal and political risks rise. That pricing sets tougher conditions for governments planning new debt sales and raises borrowing costs for households and businesses; investors will watch upcoming political events and fiscal announcements for cues on whether yields will stabilize or move higher.