By Iain Withers and Dhara Ranasinghe LONDON, Aug 19 European government bond yields rose to new multi-year highs on Wednesday as a global selloff deepened on fears of swelling sovereign debt, while oil futures gained for a fourth straight day on receding prospects of a deal to…
d the conflict in the Middle East. European stocks edged lower, while Wall Street futures pointed to modest falls, after stocks across Asia fell on concerns about the outlook for semiconductor companies
South Korean shares closed nearly 6% lower, posting their biggest one-day drop in three weeks. Long-term borrowing costs from the U.S. to Germany and Japan have soared recently as investors fret over ballooning government debt and high inflation, in part driven by the Iran war pushing up oil prices. German 10- and 30-year Bund yields rose to fresh 15-year highs, with 10-year borrowing costs last trading just above 3%, while French 10-year yields rose to their highest levels in 18 years in a sign of growing unease across some of the world’s biggest government bond markets..
The yield on the U.S. long bond steadied around 5.28% on Wednesday after hitting its highest in nearly 20 years on Tuesday, at nearly 5.34%. Yields go up when bond prices go down, and the selloff matters because long-end sovereign yields act as an anchor for the price of nearly every other asset in financial markets, 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 expected more frequent bouts of pressure from bond investors. “I think this is going to be the norm going forward. There are no aggressive measures by any Western governments to curb spending.” A rise in Japan’s benchmark 10-year bond yield toward 3%, touching a three-decade high, is also a warning sign for global debt markets that for years have…