Global bond markets came under another wave of selling Thursday, pushing long-term borrowing costs to levels not seen in decades across the United States, Britain, France and Japan.
Britain’s 30-year gilt yield climbed above 6% for the first time since 1998, while the U.S. 10-year Treasury yield reached 5.34%, its highest level since 2002. Reuters said inflation concerns, rising energy prices and growing government borrowing needs are driving investors to demand higher returns from long-dated debt.
The move extends the Treasury selloff that has already pushed U.S. yields above 5%, tightening financial conditions even as equities remain close to record levels.
UK Borrowing Costs Reach a 28-Year High
Britain is emerging as one of the clearest pressure points.
The 30-year gilt yield moved above 6%, while UK bank shares sold off sharply. NatWest fell more than 5%, HSBC lost over 4% and Barclays dropped nearly 4% as markets also became more nervous about the government’s finances ahead of the October budget.
Higher yields also increase the government’s refinancing burden. Britain’s interest costs are already running near 4% of GDP, roughly twice the pre-pandemic decade average.
France and Japan Add to the Pressure
The selloff is not limited to Anglo-American markets.
French 10-year yields have climbed toward 5%, while the spread over German government debt has widened as investors focus on France’s fiscal outlook. Japan has meanwhile recorded five consecutive quarters of rising sovereign yields as inflation becomes more persistent and the Bank of Japan continues tightening policy.
The move shows why long-term yields can rise even when near-term central-bank expectations soften. Inflation, debt supply and the extra premium investors demand for holding long-duration bonds can overpower changes in short-term policy expectations.
AI Spending Is Adding More Bond Supply
A less obvious factor is the AI boom itself.
Alphabet, Amazon, Meta, Microsoft and Oracle have issued roughly $220 billion of debt this year, more than double last year’s total, as they finance data centers and AI infrastructure. Greater bond supply can push yields higher if investors demand additional compensation to absorb it.
The result is increasingly a cross-asset problem.
Higher yields raise mortgage and corporate borrowing costs while also making government bonds more competitive with stocks. The same mechanism explains why Treasury yields have repeatedly pressured the S&P 500 and Nasdaq.
