The yield on 30-year US Treasury bonds hit 5.31% on August 17, the highest level since 2007, amid investor worries over growing government spending, inflation above Federal Reserve targets, and heavy bond supply [1, 2]. On August 18, the US 10-year Treasury yield rose to 4.75%, marking the highest level in 19 months as inflation concerns and record corporate debt issuance of $145 billion weighed on markets [3].
In Japan, 10-year government bond yields climbed to a three-decade high near 2.9%–3.0%, reaching 2.925% on August 17 and 2.945% on August 18, levels last seen in the mid-1990s. Analysts attribute this rise to expectations that the Bank of Japan will accelerate monetary tightening, possibly raising interest rates as soon as September 2026 [4, 5, 6, 7, 8, 9]. Keisuke Tsuruta of Mitsubishi UFJ Morgan Stanley Securities said, "At present, a bearish outlook on government bonds is spreading globally, and the upward trend in yields is intensifying, which is a cause for concern" [4].
European bond yields followed the global trend. Germany’s 10-year Bund yields touched the highest level since 2011. French and UK long-term bonds also reached multi-year highs in mid-August 2026 [1, 7, 9]. On August 18, German 30-year bonds traded at yields not seen in 15 years [7].
The rise in bond yields reflects concerns over inflation pressures, central bank interest rate hike expectations, and large fiscal deficits, especially in the US where federal government debt is nearing $40 trillion [1, 10, 7, 9]. Jonas Goltermann from Capital Economics noted, "Bond yields’ recent surge suggests investors are losing patience with fiscal profligacy...the fiscal outlook in several major economies is problematic, and politicians have shown little appetite for addressing the issue" [7].
Additional pressure comes from rising oil prices above $90 per barrel and ongoing geopolitical tensions in the Middle East, factors also influencing global bond markets [10, 3, 7, 9]. Ian Lyngen at BMO Capital Markets said, "The selloff in Treasuries has become a macro event unto itself" [3]. TD analyst Gennadiy Goldberg added, "We believe the long-end has been subjected to death by a thousand cuts...Low investor conviction could leave yields under sustained pressure in the near term" [7].
Despite these pressures, the US Federal Reserve is viewed as less likely to raise rates at its September 2026 meeting, with markets pricing about a 35% chance of a hike amid ongoing economic uncertainty [3].
Markets will closely watch the Bank of Japan's policy decision next month. The BoJ is expected to accelerate tightening, potentially pushing yields even higher [4, 5, 6, 7, 8, 9].
