Global bond markets are under mounting pressure as a major international financial advisory giant warns this could have implications across almost every asset class.
Benchmark long-term yields are climbing to levels that are unsettling investors worldwide.
The 30-year US Treasury has returned to 5% for the first time since July before easing slightly to 4.98%. In the UK, the 30-year gilt yield touched 5.75% this week, the highest since 1998. In Japan, the 30-year yield reached a record 3.29%
Nigel Green, CEO of deVere Group, says: “The return of the 30-year US Treasury to 5% is a wake-up call.
“Investors need to act. Markets are confronting a perfect storm of enormous debt issuance, inflation that is proving sticky, and central banks that have stepped back from bond buying.
“The result is sustained downward pressure on long-term bond prices with global repercussions.”
Governments have resumed heavy borrowing after the summer pause.
The UK’s record £14 billion 10-year gilt syndication highlighted demand at shorter maturities but hesitation at the long end. In Washington, the Treasury has signalled heavier auction schedules into the autumn. This surge of supply comes just as the base of demand from pension funds, insurers, and central banks is fading.
Nigel Green comments: “The imbalance between supply and demand is striking. For years pension funds and insurers were reliable buyers of long bonds, while central banks absorbed vast amounts of issuance. This period has ended.
“Institutions are reducing exposure to duration risk and governments are leaning more heavily on private markets. This dynamic points to yields remaining elevated.”
Inflation adds to the strain. US headline inflation is still above 3%. Eurozone inflation is hovering near 2.6%. In the UK, policymakers are still working to bring inflation back towards the 2% Bank of England target. Political risks are layering on further uncertainty. In Washington, President Donald Trump has criticised the Federal Reserve, raising investor concerns that monetary policy could be influenced by fiscal pressures.
The deVere chief executive explains: “If markets come to believe that central banks are not fully independent, the cost of long-term borrowing is likely to increase further.
“The widening gap between 30-year and 10-year US Treasury yields, which is now the largest since 2021, suggests that pressure is intensifying at the long end of the curve.”
The implications reach far beyond government debt.
Higher long-term yields affect valuations across global equities, real estate, and corporate credit. Growth and technology stocks are particularly exposed to higher discount rates. Property markets could see renewed downward revisions as financing costs rise. Companies looking to refinance debt may face heavier costs, while emerging markets reliant on dollar funding could experience additional volatility.
Nigel Green says: “The short-term trajectory points to further strain.
“Investors should be adjusting portfolios now. Long-duration assets may face more pressure, while areas such as energy, financials, and infrastructure appear better positioned to deliver returns in this environment.”
Currency markets are also responding. The dollar is continuing to attract inflows, strengthening against risk-sensitive currencies.
Sterling and the euro are showing vulnerability amid fiscal concerns and weaker growth. Emerging market currencies are prone to renewed selling episodes whenever US yields climb.
Nigel Green concludes: “Investors should be prepared for yields to stay high and for volatility to rise.
“Portfolios need to evolve for a world where governments are issuing record debt, inflation is sticky, and the long end of the market is under sustained stress.”
