By Yoruk Bahceli and Junko Fujita
LONDON/TOKYO (Reuters) -Global long-dated government borrowing costs continued their march higher on Wednesday, breaching record highs in Japan and rising to fresh multi-year peaks in Britain and Germany as concerns mounted over global fiscal health.
Britain’s gilts again led the selloff in early trading, with 30-year yields touching a fresh high since 1998, adding to a slump on Tuesday that also saw the pound tumble.
U.S. 30-year Treasury yields rose to the closely watched 5% level for the first time since mid-July, while in Germany, the euro zone benchmark, they rose to the highest since 2011.
Earlier, 30-year Japanese bond yields jumped as much as 8 bps to a record high of 3.28% while 20-year yields rose to their highest since 1999.
“The current dynamic is further evidence that investor appetite for ultra-long paper clearly waned, not only from private investors but also from institutional players who typically provide a more stable demand base for this segment,” said Dario Messi, head of fixed income research at Julius Baer.
Long-dated government bonds have remained under pressure but are facing fresh challenges given a number of developments worrying investors in high-debt economies.
In Britain, Prime Minister Keir Starmer’s reshuffle of his top team of advisers on Monday renewed focus on fiscal challenges given the UK’s high levels of borrowing and slow growth. A budget is due later in the year, prompting weeks of speculation about tax rises that could dampen the economy.
In France, investors have been unnerved by Prime Minister Francois Bayrou’s calling of a confidence vote to win backing for an unpopular debt-reduction plan. He is expected to lose the vote.
In Japan, Prime Minister Shigeru Ishiba’s close aide announced his intention to resign from his post, raised bets that Ishiba, who has resisted calls to quit over an election loss, may follow suit.
(Reporting by Yoruk Bahceli, Junko Fujita and Rae Wee; Editing by Bernadette Baum)
Comments