Treasury 10-Year Yield Eclipses 2.5% Amid Global Bond Selloff

  • Benchmark U.S. yield climbs to highest level since 2014
  • German bund yields approach highest level since January

Has the Bull Market in Bonds Come to an End?

Treasury 10-year yields climbed above 2.5 percent for the first time since 2014 as surging oil prices added momentum to a global rout in bonds.

This quarter has marked a turnaround in global fixed-income securities, with yields climbing from record lows amid a repricing of inflation expectations and bets on tighter central-bank policy.

Longer-maturity Treasuries declined Monday as crude oil prices reached a 17-month high. The yield on similar-maturity German bunds approached the highest level since January. The U.S. is primed for a rate hike Wednesday, while the European Central Bank said last week it plans to slow bond purchases from April, and the Bank of Japan has signaled it’s shifting away from its quantitative-easing framework.

“There’s been some pretty decent cheapening across global bond markets,” said Craig Collins, managing director of rates trading at Bank of Montreal in London. The spike in oil prices since OPEC announced a cut in output has led to further cheapening, while in Europe “you had the ECB last week, all contributing to the steepening that we’ve seen.”

  • Treasury 10-year note yields reached 2.53 percent Monday. Germany’s 10-year bund yield rose three basis points to 0.39 percent, having touched 0.46 percent on Dec. 8
  • Traders see 100 percent odds of a hike by the Fed Dec. 14
  • The Treasury plans to auction three- and 10-year notes Monday, and 30-year bonds Tuesday.
  • Bearish bets on 10-year Treasuries reached highest in almost two years last week, according to Commodity Futures Trading Commission data.
  • Sustained break in Treasury yields above 2.5 percent would open up an attempt at 3 percent: Imre Speizer from Westpac Banking Corp.
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