Global Bond Selloff Accelerates: US 30Y Yield Hits 2007 High at 5.11%

The global bond rout this week represents a sharp reset in market expectations around inflationThe rate at which prices rise across an economy. and central bank policy. Rising energy prices from the Iran conflict have ignited concerns that sticky price pressures will force the Federal Reserve and other central banks to hold rates higher for longer, or even begin hiking again. Treasury yields have climbed relentlessly, with the 30-year benchmark hitting 5.11%, the highest level since mid-2025. Gilts, Bunds, and JGBs have all sold off in tandem, signaling a broad repricing of inflation risk across developed markets.

Data points illustrate the magnitude of the shift. The British pound is tracking its worst week since 2024 against the dollar as UK gilt yields climb. Goldman Sachs notes that bond futures face risks from a rapid hedging overhaul. JPMorgan strategists warn that yields are becoming "unhinged" and pose an early test for incoming Federal Reserve Chair Kevin Warsh. Wall Street banks have collectively moved to price out near-term Fed rate cuts and are now eyeing possible hikes within the next 12 months if inflationThe rate at which prices rise across an economy. momentumThe empirical fact that winners keep winning over the medium term. persists. Sébastien Page at T. Rowe Price frames this as a collision course between inflation and Fed policy.

The cross-asset consequences are significant. Equity indices that have soared on AI enthusiasm and mega-cap concentration now face headwinds from higher discount rates and crowded positioning. Risk-off sentiment accelerated late this week as investors shed both bonds and stocks. The Russell 2000 showed some resilience on rotation out of growth, while semiconductor and mega-cap tech names like NVDA, AMD, and TSLA faced selling pressure as borrowing costs rose. Credit spreads have widened modestly as investors demand higher yields for risk, benefiting high-yield corporate bonds over sovereigns in the near term.

Sceptics argue that higher yields may eventually attract new flows into fixed income, especially if real yields remain attractive on an absolute basis. However, the speed and breadth of the move have unnerved many. Some analysts, including RBC's Lori Calvasina, warn that if Treasury yields breach 5%, US equity valuations could face a significant reset, as elevated discount rates compress price-to-earnings multiples. G-7 finance chiefs are scheduled to discuss the selloff, signaling official concern about spillover risks.