Bonds

Why the US bond selloff could keep spiralling

9 Apr 2025

Yields on 30-year government debt spiked to almost 4.9%, from below 4.4% on Friday, as Donald Trump’s trade war roils the world’s key funding market. The squeeze reinforces longer-term fears about the cost of tariffs. Barring a policy U-turn, the selling looks set to continue.

Half-baked budget leaves France vulnerable

10 Feb 2025

Prime Minister François Bayrou managed to ram his finance bill through parliament. Bond investors look relieved, but with a deficit at 5.4% of GDP, France’s government still can’t control a rising debt load. It may need more market pressure to get serious.

Uncle Sam’s debt offers flimsy refuge to investors

6 Feb 2025

Yields on 10-year US government bonds have dropped amid signs of slowing growth and President Donald Trump’s tariff talk. But the safe haven faces threats from $8 trln in unfinanced tax cuts, inflation, and Elon Musk’s meddling with payment systems. The calm is unlikely to last.

Bond bulls put Beijing on the horns of a dilemma

28 Jan 2025

The relentless plunge in yields allows China to issue debt inexpensively to stimulate its $18 trln economy, but it also reinforces expectations of slow GDP growth, a weak yuan and the People’s Republic as a low-interest-rate country. Managing that tension is getting riskier.

Bond chaos induces headaches worldwide

16 Jan 2025

Rising yields on long-term US debt, now around 5% despite the Fed’s cuts, are having ripple effects across the globe. Leaders in Britain and beyond may be forced to rethink their policies. In this Viewsroom podcast, Breakingviews columnists explain the potential pain in store.

Outlier UK’s least-bad fix is via a weak currency

10 Jan 2025

After a bad week, British government bonds are stable. But the UK’s fiscal and current account deficits – and the third of gilts held overseas – make it more vulnerable to crises than other big economies. A lower currency would fuel inflation, but ease a vicious macro cycle.

UK debt tantrum is a problem not a panic – for now

9 Jan 2025

Yields on 30-year government bonds hit 5.38% - the highest since 1998, mirroring their 2022 meltdown. That crisis, though, was due to Britain’s fiscal folly. This one is driven by US fears. It still spells big trouble for finance minister Rachel Reeves and the Bank of England.

Altered states will rule in 2025

9 Jan 2025

From President-elect Donald Trump’s whims to volatile capital markets, uncertainty is rising worldwide. In this Viewsroom podcast, Breakingviews columnists share predictions for how robotic cars, obesity drug-fueled M&A or a smartphone backlash will take root amid the upheaval.

Trump’s agenda already faces irresistible forces

8 Jan 2025

With his party in legislative control, the US president-elect is promising action on an $8 trln tax plan, immigration and energy. But with long-term bond yields spiking to 5% even after central bank cuts and congressional dysfunction looming, he might be stymied from the start.

Credit markets’ calm veneer will crack

26 Dec 2024

Rates are falling, and so too are corporate defaults. Yet firms like Altice France, with $25 bln of borrowings, will still have to grapple with high funding costs. Losses on opaque private-credit loans will mount. Wafer-thin returns for risky debt leave little room for error.

Donald Trump will meet his match in bond markets

18 Dec 2024

The president-elect’s bullying and bluster may steamroll any political resistance to tax cuts and tariff hikes. Like many world leaders before him, though, he’s about to feel the punch that debt buyers pack. They’ll beat back an inflationary agenda that imperils US finances.

ECB approach to French storm can be a Gallic shrug

4 Dec 2024

The risk premium on France’s debt is at its highest since the 2012 euro zone crisis. Yet even if it worsens, the European Central Bank is unlikely to deploy knee-jerk rate cuts or bond-buying. It also has the tools to address spillover effects on other member states.

China can let new bond binge play out – for now

4 Dec 2024

Last time treasury yields dived, the central bank jumped in. Now they’re even lower, but there is less official fuss. Concern over speculation has eased and the government is about to borrow billions. That resets the bar for intervention.

France faces long-term pain more than debt crisis

28 Nov 2024

Fears that PM Michel Barnier will be ousted by parliament after failing to pass his budget sent French spreads to a 12-year high. The country’s size and resources shield it from a sharp fiscal crunch, but six months without a proper government would weigh heavily on its finances.

China developers’ survival fight gets litmus test

15 Nov 2024

Sunac has given investors four options for restructuring $2 bln of onshore bonds, including an 82% haircut and a debt-for-equity swap. How they vote will reveal their views on both the $3.1 bln firm’s chances of survival and Beijing’s attempts to end the property slump.

Debt rule tweak can help UK avoid moron premium

25 Oct 2024

Two years ago, former Prime Minister Liz Truss’ unfunded tax cuts sent 10-year gilt yields surging to 4.5%. Now, new Chancellor Rachel Reeves can avoid a similar debacle with small changes to the fiscal rules in next week’s Budget. With yields at 4.2%, there is no room for error.

Italy has more to gain from France’s pain

14 Oct 2024

Rome borrowing costs are converging with Paris. Prime Minister Giorgia Meloni’s stable government is pledging to contain its deficit and pushing through reforms, at a time when its peer is in turmoil. To press home the advantage, though, Meloni will need to take bolder action.

Debt feast helps buyout firms through IPO gloom

7 Oct 2024

Dividend recaps, where private equity managers pile debt onto a company to give themselves a payday, are booming, with $17 bln in the US last month. Since public offerings look tough, it’s a handy cash-raising alternative. The trend will continue, if the economy plays ball.

Thames creditors face messy flush, or deep rinse

30 Sep 2024

The UK water company is running out of cash and racing to raise equity. A new investor would want a big chunk taken out of its 16 bln pound debt load, which may fall heavily on bondholders who can’t put up new money. Even that may be preferable to a government-led overhaul.

BoE bond tinkering offers Labour a fiscal lifeline

18 Sep 2024

Governor Andrew Bailey will this week say by how much he wants to reduce the Bank of England’s balance sheet in 2025. If he sticks to 100 bln pounds, higher gilt redemptions and fewer sales will cut the BoE’s losses. That would give the government a much-needed fiscal boost.