The Global Bond Market Blows Up
From the original
Government bond yields in France and Italy have started going vertical
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The desk contends that the long-end of global bond markets is at a critical juncture, characterized by a worrying upward trend in yields that could destabilize the existing equilibrium. Per the full note from ING, while current long-term yields may seem reasonable, external pressures are likely to propel them higher, driving tensions particularly in the context of Japanese yields and the Bank of Japan's (BoJ) slow response to inflation. With a significant divergence in yields, particularly noted in the Japanese 30-year yield hitting 4.2%, institutional traders should monitor the potential spillover effects into key currency pairs like EUR/USD and USD/JPY. Consensus from our coverage suggests targets for the EUR/USD at 1.1700 and GBP/USD at 1.3400 for March 2026, hinting at some expectations of relative stability amidst volatility in bond yields.