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2026-05-29 18:00:26
[Global Bond Markets Experience Dramatic Volatility in May: US 30-Year Yield Surges to 5.2% Before Falling Back as Market Shifts from Rate Hike Expectations to Economic Slowdown] ⑴ The May conflict with Iran impacted global bond markets. The yield on the US 30-year Treasury note surged to approximately 5.2% on May 20, its highest level since 2007. The yield on the UK 30-year gilt rose to 5.87%, its highest since 1998; the yield on the German 10-year gilt reached its highest level since 2011; and some Japanese government bond yields hit record highs. ⑵ As the US and Iran announced progress in negotiations and weak economic data weakened the case for a rate hike, borrowing costs fell along with oil prices. Between April 30 and May 29, the yield on the US 10-year Treasury note rose by 6 basis points, while the yield on the German 10-year gilt fell by 6 basis points, and the yield on the UK 10-year gilt fell by approximately 21 basis points. ⑶ Traders have completely withdrawn their bets on a Fed rate cut this year and at one point fully priced in a 25 basis point rate hike in December. The U.S. PCE price index rose 3.8% in April, the largest increase since May 2023. (4) Franklin Templeton's head of European fixed income stated that the market is concerned that inflation will persist longer than expected. Bank of America analysts believe the key driver of the U.S. Treasury sell-off is "deteriorating fiscal dynamics," while some investors' doubts about the independence of the new Federal Reserve Chairman, Warsh, are also a factor.
