Global Government Bonds Under Pressure Amid U.S. Economic Uncertainty

Rising concerns over the U.S. economy and ongoing tariff disputes have put global government bonds under selling pressure, experts say. Donald Trump’s push for interest-rate cuts, combined with a major spending bill, has shaken investor confidence, sending bond prices down while yields rise.

Last week, a federal appeals court in Washington DC ruled that President Trump had exceeded his authority with sweeping reciprocal tariffs. Should the Supreme Court deem the tariffs illegal, it remains unclear how the U.S. will compensate for the lost revenue.

The Federal Reserve (Fed) is expected to cut interest rates on 17 September. Meanwhile, U.S. 10-year bonds rose to 4.3%, Japan’s 10-year yield hit 1.63%, France’s 10-year bond reached 3.58%, and the UK’s 10-year yield climbed to 4.69%, reflecting persistent uncertainty in these markets.

In this climate, central banks and institutional investors have turned to gold, which reached a record $3,578.54 per ounce on Wednesday, highlighting its role as a safe-haven asset.

Ekin Cinar, chief economist at Turkish financial services firm Tacirler, said that national debt levels and budget deficits are impacting long-term bond yields, particularly in the UK. She added that growing pressure on the Fed to cut rates could steepen the yield curve in the coming months.

Burak Pirlanta, research specialist at Gedik Investment, noted that U.S. bonds are under pressure due to fiscal concerns, including record budget deficits and new spending plans. He highlighted that Trump’s proposed tariffs on China could further disrupt global trade, raising inflation and reducing demand for bonds.

Pirlanta also pointed to developments in Japan and the UK as deepening the crisis. Japan’s inflation now surpasses that of the U.S., while in the UK, overspending has pushed bond yields to their highest level since 1998.

Even if the Fed cuts rates, experts warn that long-term yields may not fall, as rate cuts could weaken the U.S. dollar or increase borrowing costs. As a result, investors are increasingly turning to tangible assets like gold and silver, with gold prices up more than 35% this year and global reserves at a 30-year high.

The surge in bond yields reflects financial pressures, inflation concerns, and central bank policies, with crises in Japan and the UK serving as a warning for global markets to prioritise safer assets.

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