Payden & Rygel: YTD change in 30-year government bond yields
With a deficit-boosting bill passing the U.S. House this week despite another downgrade to the U.S. government's credit rating, worried investors cited rising Treasury yields as a sign that fiscal woes are driving the bond market. Indeed, 30-year Treasury yields exceeded 5% this week - the highest since 2006.
However, yields are rising globally, not just in the U.S. While 30-year U.S. Treasury yields rose 33 basis points year-to-date, Japanese 30-year government bond yields have surged 89 basis points, reaching their highest levels since the 30-year bonds devout in September 1999.
So, what's going on? A mix of concerns created a perfect storm for higher global yields, from higher inflation in Japan to investor demand for more "term premium" to take on additional duration risk in the U.S. and Europe. On the bright side, will rising debt funding costs finally nudge policymakers to take action to reduce U.S. deficits?
