Bond Markets: Yields Hit Multi-Decade Highs

Global bond markets face synchronized yield spikes that last appeared decades ago. Japan's 10-year yield reached 3.03% for the first time since 1996 while its longer maturities set fresh records. The US 10-year and 30-year yields stand at 19-year highs, the UK's 10-year at its peak since 2008, and Germany's 10-year at its highest since 2011.

Central Bank Rate Hikes Drive Term Premium

The ECB raised rates again in September. Markets now price over 50% odds of a Fed hike this month and expect the Bank of Japan to lift its policy rate to 1.25%. Beyond policy rates, investors demand higher compensation for inflation and fiscal risk, pushing term premiums sharply higher in Japan, France and the UK.

Debt Load Meets AI Infrastructure Spending

Global government debt sits near 94% of world GDP and the IMF projects it will reach 100% by 2029. Interest payments already consume almost 3% of world GDP, up from 2% four years ago. At the same time the five largest US tech firms plan $697 billion in AI infrastructure outlays this year, with private credit now funding over a third of those deals after rising from 17% a few years earlier. Higher yields directly lift the cost of that AI debt, mortgage refinancing and government borrowing while compressing equity valuations.