Global Bond Selloff Deepens as Higher-for-Longer Rate Fears Return

Government bond markets are under pressure as investors reassess how long borrowing costs will stay elevated. Reuters reported on 29 September that energy-driven inflation and AI-led growth were pushing markets towards a higher-for-longer rates outlook.

By that date, two-year US Treasury yields had climbed almost 60 basis points in September, putting them on course for their largest monthly increase since early 2023.

US 10-year yields had crossed 5%, with a rise of around 50 basis points during the month. Higher yields mean lower prices for existing bonds.

The pressure extends beyond America. Two-year borrowing costs in France, Germany, Britain and Australia were heading for their biggest monthly jumps since March, while Japanese government bond yields remained near multi-decade highs.

For businesses and households, the implications reach beyond financial markets: government bond yields influence the cost of corporate borrowing and mortgages.

October brings further tests, including US jobs and inflation reports, European budget decisions and more potential borrowing by technology companies. September’s final monthly moves were not yet settled when Reuters published its report.

Source: Reuters, via MarketScreener, 29 September 2026.

Cover: The Federal Reserve’s Marriner S. Eccles Building in Washington, D.C., photographed on 29 March 2011. Illustrative file photo. Credit: Britt Leckman / Federal Reserve. Public domain, U.S. government work. Cropped.