Long-term bond yields surge around the world

The Star

26-05-2025

WASHINGTON: Around the world, yields on longer-dated sovereign debt have soared as investors question the ability of governments to cover massive budget deficits.
In the United States, 30-year bond yields last week approached levels last seen in 2007 as President Donald Trump's tax bill is poised to swell the budget deficit.
Those in Japan exceeded the highest on record in data since 1999, with auctions in both countries drawing tepid demand.
Long-dated bonds in Britain, Germany and Australia also faced selling pressure.
Meanwhile, banks in China lowered their benchmark lending rates for the first time in seven months, and Australia's central bank cut its key interest rate for a second time this year in a bid to mitigate the impact of US tariffs.
Meanwhile, a pullback by central banks and pension funds from bond markets has marginalised a once-dependable source of funding.
The giants of corporate America, from Pfizer Inc to Alphabet Inc, are borrowing in euros like never before as the anxiety triggered by Trump's tariff threats pushes them to hunt for alternative funding avenues in case their home market freezes up.
In addition to the decisions by Australian and Chinese banks, Iceland, Jamaica, Sri Lanka, Egypt and Indonesia lowered rates.
Officials in Angola, Nigeria, Zambia, Ghana and Paraguay kept borrowing costs unchanged.
The detection of bird flu in a single poultry farm in southern Brazil is reverberating around the world, cutting supplies to voracious consumers from China to Europe.
Shipments to top destinations, which also include Mexico and South Korea, have been suspended as the world's largest chicken exporter seeks to stop the deadly H5N1 strain from spreading.
China, a dominant force in batteries and electric vehicle manufacturing, is also the undisputed leader in critical minerals refining – a position it has leveraged to retaliate against Trump's tariffs.
Strategic concerns have preoccupied Beijing for decades, well before the United States and other Western nations began fretting about access to key metals and the fragility of industrial supply chains.
On a corporate campus in north-west Taiwan, a rushed effort to bolster the island's defences against China is taking shape – with little help from the technology giants who turned this outpost into a global chipmaking hub.
The military officials entering and exiting a factory run by Coretronic Intelligent Robotics Corp – located just kilometres from the beaches where Beijing's forces would land in an invasion – underscore the firm's role at the heart of Taiwan's homegrown efforts to arm itself with aerial drones.
China imported the most gold in nearly a year last month despite record prices after heightened demand for the precious metal prompted the central bank to ease restrictions on bullion inflows.
The rise in imports is likely due to the People's Bank of China allocating fresh quotas to some commercial banks in April, as the authority responds to strong demand from institutional and retail investors at the height of the trade war.
Europe UK inflation jumped more than forecast to its highest rate in over a year as households were hit by a raft of price increases, prompting investors to pare bets on rate cuts from the Bank of England (BoE).
Services inflation, watched closely by the BoE for signs of underlying price pressures, accelerated to 5.4% from 4.7%.
Private-sector activity in the euro area unexpectedly shrank in May as services recorded their worst performance in 16 months.
Bulgaria is close to clearing a major hurdle toward euro adoption, putting the Black Sea nation on course to join the currency area next year.
US Chinese shipments of Apple Inc's iPhone and other mobile devices to the United States dived to their lowest levels since 2011 in April, underscoring how the threat of US tariffs choked off the flow of big-ticket goods between the world's two largest economies.
US businesses are under mounting pressure to import goods while Trump's higher tariffs are on pause, and they're simultaneously navigating increasingly complex filing rules when their cargo crosses the border.
Mexico's annual inflation accelerated more than expected early this month in a report that likely won't deter central bankers from cutting interest rates again in June, given the economy also posted weak growth.
Argentina's economy grew less than expected in March as the country braced for a new programme with the International Monetary Fund.
South America's second-largest economy has been showing consistent signs of momentum after two quarters of contraction exacerbated by austerity policies in the first half of 2024. — Bloomberg