Global bonds remain under heavy pressure after the US 10-year Treasury yield touched 5% for the first time since 2023, underscoring the renewed sell-off at the long end of the curve. Rising real yields remain the dominant theme, with concerns over fiscal deficits, heavy investment spending and persistent government bond supply keeping duration under pressure.

BofA argues that the increase in long-term yields is predominantly a real-rate move, rather than an inflation-expectations story, reflecting larger fiscal deficits and the surge in AI-related capital investment. In its view, absent weaker investment, fiscal consolidation or financial repression, the path of least resistance remains towards higher real yields.

The move in the 10-year through 5% — its highest level since 2023 — provides an important backdrop to this week's supply calendar, particularly with the US Treasury bringing duration-heavy 20-year and 10-year TIPS supply. Europe also faces a busy issuance week, although large coupon and redemption flows should provide a significant technical offset. (LS – Continue Reading)

China’s consumer spending and investment languished in August, even as industrial output improved more than expected, adding pressure on officials to step up support for the economy.

Retail sales rose 0.4% from a year ago, worse than the consensus forecast for a 0.8% gain by economists in a Bloomberg poll, and down from 0.6% in July. (BBG – Continue Reading)