Global Bond Yields Near Decades-Highs as Oil Rises

US long bond steadies at 5.27% after touching near-20-year high of 5.3371%; Brent up to $91.62 a barrel Global bond yields stabilised on Wednesday near their highest levels in decades amid concerns over swelling sovereign debt, while oil futures rose for a fourth straight day on fading prospects of a deal to end the Middle East conflict. European stocks were broadly flat, and Wall Street futures pointed to gains of about 0.1%, after Asian markets fell on worries over the semiconductor sector's outlook. South Korean shares closed nearly 6% lower, marking their biggest one-day drop in three weeks. Long-term borrowing costs from the US to Germany and Japan have climbed sharply in recent weeks as investors grow anxious over ballooning government debt and elevated inflation, partly driven by oil prices rising amid the Iran war. The yield on the US long bond held around 5.27% on Wednesday after touching its highest level in nearly 20 years — 5.3371% — on Tuesday. German and French debt yields similarly steadied. Yields rise when bond prices fall, and the selloff carries broader significance since long-end sovereign yields serve as an anchor for prices across nearly every other asset class, including mortgage rates. "If you combine a sticky inflation environment and excessive government spending, then the natural move for bond yields is higher," said Jason Da Silva, director of global investment strategy at Arbuthnot Latham, adding that he expects more frequent bouts of pressure from bond investors going forward. "I think this is going to be the norm going forward. There are no aggressive measures by any Western governments to curb spending." Japan's benchmark 10-year sovereign yield climbing toward 3%, touching a three-decade high, is being read as a fresh warning sign for global debt markets, which have long relied on low Japanese rates to drive a steady flow of Japanese investment abroad. The inflation outlook remains clouded by the lack of progress toward reopening the Strait of Hormuz. Oil futures were last up around 0.6% on the day, with light crude at $85.48 a barrel and Brent crude at $91.62 a barrel. Later Wednesday, the US Federal Reserve is set to release minutes from its July meeting, where it held rates steady; Chair Kevin Warsh unsettled markets at the time by offering few clues on how the central bank might respond to persistent inflation. The US is also due to sell $16 billion in 20-year debt. "Governments face a real choice between spending discipline and materially higher borrowing costs, and markets will keep testing which one they choose," said Nigel Green, CEO of financial advisory deVere Group. In China, shares in Unitree, the world's largest humanoid-robot maker, surged 600% on their trading debut, a listing more than 8,000 times oversubscribed by retail investors. The bond selloff, along with reports that Anthropic's annual revenue run-rate topped $65 billion at the end of July — falling short of some market expectations — triggered selling in chipmaking shares. The risk-averse mood offered modest support to an otherwise softening dollar, though moves were small; the US dollar index was last down 0.2% at 99.405. The Canadian dollar edged higher after President Donald Trump paused a planned 50% tariff on Canadian goods for three days, saying the two countries had reached a deal. The euro rose 0.25% to $1.160325, while the yen traded at 159.1 per dollar, just short of the 160 level investors view as a potential trigger for renewed official intervention. European inflation data is due later Wednesday, alongside earnings from Lowe's, Target and TJX, which will be closely watched following softer-than-expected US retail sales data last week. British inflation rose 2.9% in July, in line with economist forecasts, driven higher by an increase in household energy bills.