Global Bond Yields Surge to 2008 Highs Ahead of Fed Decision, Pressuring Risk Assets

Global bond yields are flashing red. The Bloomberg Global Treasury Index surged to 3.68%, a level not seen since the 2008 financial crisis. This broad sell-off across major government debt markets precedes pivotal rate decisions from the Federal Reserve, Bank of Japan, and Bank of England.

US 30-year Treasuries are near 2007 highs, UK gilts logged their longest streak above 5% in two decades, and German 10-year yields hit 2011 peaks. Japan's 40-year yield broke 4%, with its 5-year hitting a record. This yield surge means bond prices are collapsing, with BlackRock's 20+ Year Treasury ETF down 5% in a month, over 50% since 2020.

The catalyst: robust US employment and growth data, shifting rate expectations from cuts to potential hikes. Traders now price a one-in-three chance of a Fed hike this month. Less Fed forward guidance has also spiked bond market volatility, with the ICE BofA MOVE Index hitting a two-month high.

Higher yields elevate the risk-free rate, squeezing equity valuations and corporate borrowing. Moody's warns of a new era of structurally higher inflation and rates. For crypto, this is a double-edged sword: expensive money competes for capital, yet fiscal stress could bolster hard assets like Bitcoin.

Bitcoin has held firm near $65,157, up 1.3% recently. Its resilience faces a critical test with Wednesday's Fed decision. The market will soon know if current bond yields accurately price policy, or if further climbs are imminent.