10 Year Bond Yields Moving Higher Globally In Unison

Posted by Bigtrends on May 7, 2015 7:26 AM

10 Year Bond Yields Moving Higher Globally In Unison

by BespokeInvest

In case you haven’t noticed, interest rates on longer-dated bonds have spiked globally over the last two weeks.  Below is a table showing the current 10-year yield for the sovereign debt of Australia, the US, the UK, Canada, the Euro, and Japan.  It also shows the change in basis points (bps) over the last two weeks.  As shown, yields have jumped sharply across the board, with the Euro 10-year yield spiking the most from 0.08% all the way up to 0.51%.

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[BigTrends.com note: First it must be noted that these interest rates are still very low historically, despite the recent pop higher. It's hard to tell at this point whether this move in bond yields (and decline in bond prices) will continue to trend in this direction, particularly in a strong manner like this.  It's interesting how various regions of the world are all moving in a correlated fashion -- this shows some of the global nature of money flows, among other things.  As far as rationale behind why this is occurring now ... a few thoughts on that:  Oil's price movement may be a factor (it's been recovering recently). Perhaps the Fed being prepared to raise interest rates this year is playing a part in it.  It wouldn't seem to be happening due a global economic comeback.  But there is a lot of global dumping of bonds for cash currently - something to be concerned about in the short/near-term (until that money goes back to work in stocks or the like).]

Below we provide one-year trading range charts for the 10-year yields shown in the table above.  All of these countries have seen yields trade in steep downtrends over the last year.  Most of these countries haven’t seen overbought levels in at least six months.  The move recently, though, is certainly causing long-term downtrends to break, bringing out the “yields have bottomed”-callers in droves.  We shall see.

 US & Euro Bond Yield Chart
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Canada & England Bond Yield Chart

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Australia & Japan Bond Yield Chart
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Courtesy of bespokeinvest

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