Why Global Investors Are Dumping Government Bonds

Global bond markets are flashing a warning signal that policymakers appear reluctant to acknowledge. Yields on government debt from Tokyo to Washington have surged to multi-year highs, driven by a combination of stubborn inflation, massive fiscal deficits, and a new source of competition from tech companies borrowing heavily to fund AI infrastructure. At a G20 finance ministers' summit in Asheville, North Carolina, investors were looking for concrete plans to address swelling government debt levels. Instead, they got a brush-off from U.S. Treasury Secretary Scott Bessent, who said that "what happens over a month doesn't matter" and that the U.S. bond market has been "the best performing bond market." The market's verdict, as one analyst put it, was a failing grade.

Bond Yields Surge Across the Developed World

The sell-off has been broad and historic. Japanese government bond yields hit their highest level since 1996. Germany, France, the UK, and Italy all posted multi-year highs. The benchmark 10-year U.S. Treasury yield broke above 4.8%, the highest level of the Trump presidency. The selling continued across Asia, Europe, and the U.S. on the day of the G20 summit's conclusion, showing no signs of abating.