The global bond sell-off intensifies, with the yield on the 10-year U.S. Treasury rising to a new high since 2025.

On Tuesday, the global bond market continued to deepen its sell-off, with the yield on the U.S. benchmark government bonds rising to its highest level since early 2025. August has already seen thin market trading, and concerns among investors about inflation prospects, coupled with a surge in corporate bond supply, have collectively driven this rise in yields. U.S. government bonds fell further on Tuesday, with yields across various maturities generally increasing by 1 to 2 basis points. Notably, the yield on the 10-year Treasury rose by about 2 basis points to 4.75%, marking a 19-month high. This wave of selling has spread to European and even Japanese sovereign bond markets, driven by increased uncertainty regarding inflation prospects and a changing structure among bond buyers. On the same day, Germany issued 30-year government bonds through a banking syndicate, with the coupon rate reaching its highest level in 15 years. Ian Lyngen, Head of U.S. Rate Strategy at BMO Capital Markets, wrote in a report to clients, "The sell-off in U.S. Treasuries has itself become a macro event." The intensive issuance of corporate bonds was also a significant driver of the market on Tuesday. On Monday, the issuance of corporate bonds in August had already reached a historical high for the month, exceeding $145 billion, with a total of 12 issuers selling $9.1 billion in bonds on that day. Meanwhile, the prospects for peace in the Middle East faced another setback. U.S. President Trump stated that he has no intention of extending the upcoming expiring agreement with Iran, and tensions in the Strait of Hormuz have intensified again. As a result, Brent crude oil rose above $91 per barrel on Tuesday, after having previously reached its highest level since late July. However, as a series of economic data has been released recently, traders have lowered their bets on a further increase in borrowing costs in the U.S. this yearthese data support the Federal Reserve's wait-and-see approach. The interest rate swap market indicates that traders estimate the probability of the Federal Reserve, led by Chairman Kevin Walsh, raising rates at the September meeting to be about 35%. The probability of a rate hike in October is considered a "coin toss," while the market has pushed back the fully priced rate hike timeline to January 2027. Lyngen further stated in his report, "We do not believe the Federal Reserve will raise rates next month, but that does not mean the market will price the odds of a hike at zero before the decision. Walsh's cancellation of forward guidance undoubtedly complicates the policy outlook."