The US 30-year Treasury yield is back at 5%!
Japan's 30-year government bond yield is at 3%, the highest level in decades.
An increasing number of economists and market pundits believe interest rates will go much higher and will become structurally high (they are not high at this point), and that the role of central banks pushing down yields will evaporate.
But I think this is wrong. Nearly every major economy faces a structural decline and a lack of economic growth. Policymakers will 'buy' growth with debt, and with mandatory spending (aging, healthcare, social services, pensions, and now defense) going through the roof, the last thing they need is spiking interest costs.
For those who expect the era of extraordinary monetary policy of the Bank of Japan and other central banks to be behind us, expect it to come back with a vengeance!
Japan's 40-year government bond yield has SKYROCKETED and hit an all-time high of 3.449%.
The magnitude of the move is absolutely SCARY.
Meanwhile, Japanese Prime Minister Ishiba said on Monday, "Our country’s fiscal situation is undoubtedly extremely poor, worse than Greece’s.”
Lastly, the Japanese economy contracted 0.7% in Q1 2025 and is on a brink of a RECESSION.
Upward pressure on US government bond yields is highly destabilizing for the global economy, because it spills over into higher interest rates for everyone else. That's an especially acute problem for the Euro zone, where this will increase pressure on the ECB to cap yields...
Abrazos,
PD: Ahora que tenemos un papa agustino, es interesante redescubrir a San Agustín:
"Cuando no puedas hablar a alguien de Dios, háblale a Dios de Él".
Y por encima de todo, nunca hables mal de nadie…
