Global bond selloff spreads to Japan, gold hits record high / Photo: DAVID GRAY - AFP/File
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Global bond selloff spreads to Japan, gold hits record high
A global bond selloff extended on Wednesday, sending yields in Japan to record levels, and gold reached a new peak, as investors fret over mounting government debt.
European equities firmed while Asia's major stock markets were in the red.
"Government bond yields have jumped sharply in recent days, largely because investors are demanding a higher return to lend to countries with heavy borrowing needs," said Richard Carter, head of fixed interest research at Quilter Cheviot.
Yields on 30-year Japanese government bonds rose to an all-time high of 3.29 percent on Wednesday, while 20-year yields reached their highest since 1999.
The selloff in Japanese debt mirrors widespread moves in the United States and Europe, with investors spooked over substantial piles of government debt globally.
It has been fuelled by "ballooning sovereign debt, political hurdles to fiscal tightening... and structurally higher inflation following the Covid disruptions and the ongoing trade war", said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Investors in Japan reacted also to concerns that Prime Minister Shigeru Ishiba might soon be forced to step down.
Ishiba, 68, took the helm of the long-dominant Liberal Democratic Party last year and has since lost his majority in both houses of parliament, most recently in upper chamber elections in July.
In the United States, the 30-year government bond yield hovered around the five-percent mark, reflecting concerns over the country's deficit and President Donald Trump's fiscal policies
Britain's selloff pushed on, albeit at a slower pace, after 30-year gilt yields on Tuesday hit levels not seen since 1998.
French and German bonds, meanwhile, showed signs of stabilising.
Traders have turned to traditional safe havens, pushing gold to a fresh high of $3,546.96 an ounce Wednesday.
Prices have risen five percent over the last six days, with investors nervous over the US Federal Reserve's future after Trump attempted to fire Fed Governor Lisa Cook.
She is accused of claiming two primary residences on mortgage documents in 2021 -- a move that tends to result in better loan terms for an individual property.
Cook has not been charged with a crime, while the alleged incidents occurred before she took office as a Fed governor in 2022.
Trump's intervention "raises questions about the long-term independence of US monetary policy -- a concern that gold naturally absorbs as a hedge against political interference", said Ole Hansen, head of commodity strategy at Saxo bank.
Oil prices dropped back amid expectations of excess supply in the coming months.
In company news, shares in Google parent Alphabet surged in after-hours trading Tuesday after a US judge rejected the government's bid to force the company to sell its Chrome web browser.
- Key figures at around 1100 GMT -
London - FTSE 100: UP 0.5 percent at 9,162.59 points
Paris - CAC 40: UP 0.9 percent at 7,723.75
Frankfurt - DAX: UP 0.7 percent at 23,659.63
Tokyo - Nikkei 225: DOWN 0.9 percent at 41,938.89 (close)
Hong Kong - Hang Seng Index: DOWN 0.6 percent at 25,343.43 (close)
Shanghai - Composite: DOWN 1.2 percent at 3,813.56 (close)
New York - Dow: DOWN 0.6 percent at 45,295.81 (close)
Euro/dollar: UP at 1.1645 from $1.1640 on Tuesday
Pound/dollar: UP at 1.3404 at from $1.3394
Dollar/yen: UP at 148.69 from 148.37 yen
Euro/pound: DOWN at 86.87 pence from 86.92 pence
Brent North Sea Crude: DOWN 2.0 percent at $67.75 per barrel
West Texas Intermediate: DOWN 2.3 percent at $64.07 per barrel
S.Vandenberghe--JdB
