Business

Wednesday, August 19, 2026 | Daily Newspaper published by GPPC Doha, Qatar.

Business

A man looks at a board displaying Japan's 10-year government bonds level outside a brokerage in Tokyo. Long-term borrowing costs from the US to Germany and Japan hit their highest in decades on Tuesday due to ballooning government debt and geopolitics, raising borrowing costs for companies and households and complicating policy.

Global bond markets put governments on notice over fiscal, inflation risks

Long-term borrowing costs from the US to Germany and Japan hit their highest in decades on Tuesday due to ballooning government debt and geopolitics, raising borrowing costs for companies and households and complicating policy. Bond markets are entering an era where the inflation and interest rate outlook is more uncertain and the upside risks are greater, as US President Donald Trump’s policies — from tariffs to war — upend the global order.Debt levels in developed countries are reaching thresholds that look increasingly unsustainable, with the US debt pile nearing $40tn. The Iran war is dragging on, pushing up oil prices and inflation and hitting global growth.In addition, massive borrowing by technology companies to fund a buildout of AI infrastructure is competing with demand for government bonds.Bond yields' recent surge "suggests investors are losing patience with fiscal profligacy," said Jonas Goltermann, chief markets economist at Capital Economics.But he said it's "entirely unsurprising: the fiscal outlook in several major economies is problematic, and politicians have shown little appetite for addressing the issue." Thirty-year bond yields in the US, the world's deepest and most systemically crucial government bond market, hit their highest since 2007 earlier on Tuesday as oil prices rose back above $90, fanning inflation worries as US-Iran peace hopes faded. They pulled back in afternoon trading. The elevated yields could squeeze households, companies, financial markets and the federal budget."We believe the long-end has been subjected to death by a thousand cuts," wrote TD analyst Gennadiy Goldberg in a research note, citing a string of reasons for the rise in rates. He wrote that "low investor conviction could leave yields under sustained pressure in the near term." In Japan, inflation angst and expectations that the central bank could hike interest rates as early as September pushed 10-year borrowing costs to a three-decade high.In Europe, Germany's 10-year Bund yield touched its highest since 2011, French yields were at their highest since 2008 and Britain's 30-year borrowing costs neared peaks hit in May that marked the highest levels since 1998. When a bond's yield rises, its price falls.Rising yields hit other assets, with major stock markets such as Nasdaq and Europe's STOXX 600 in the red on Tuesday.The selloff in government bond markets matters because the repercussions ripple through economies. Sovereign debt sets the benchmark for borrowing costs for companies and other loans, including household mortgages.Competition for capital from AI hyperscalers — the technology giants building huge data centres — rising budget deficits and, in the US, concern about clear communication from the Federal Reserve under new Chair Kevin Warsh, have exacerbated the selling, analysts said.For some, the higher yields reflect investor worries about how risky the securities have become because of the growing debt pile and uncertainty over policymaking, more than inflation concerns per se.The New York Fed estimates the term premium, or the additional compensation that investors require for lending to the government for 10 years, at around 80 bps, close to its highest level in 12 years.US 10-year Treasury yields, at around 4.71%, are now trading at levels that in the past have attracted the attention of US officials, with 5% now in focus."This will be very important, not just for bond markets, but also other financial assets as any break higher is likely to undermine confidence," said Zurich Insurance Group's chief market strategist Guy Miller. "Given the importance of this level, we are likely to see it defended by the US Treasury."A Treasury spokesperson did not respond to a request for comment.What's more, analysts reckon the Treasury's unusual decision to sell euros and not dollars in recent joint intervention with Japan to bolster a weak yen suggests it does not want bond market strains worsened by foreign central banks selling Treasuries to fund currency-support operations. Foreign holdings of US Treasuries slid in June led by declines in the holdings of Japan — the biggest foreign holder of US bonds — the UK and China. Two recent Treasury auctions also drew attention for high yields.Rising bond yields in Japan, where 30-year borrowing costs are just above 4%, are also starting to draw in Japanese investors, traditionally big buyers of US debt, creating another headwind for the US bond market.For some bond investors, rising yields were making the market attractive, which could support prices from here."We are long on duration. I don't expect it (the current bond selloff) will last," said Pictet senior investment adviser Christopher Dembik.

Indonesian flags flutter at the business district in Jakarta. FTSE Russell will continue to defer the addition of Indonesian stocks and most index classification changes until at least December, the index provider said yesterday.

FTSE Russell continues to defer Indonesian index additions, tier changes until December

FTSE Russell will continue to defer the addition of Indonesian stocks and most index classification changes until at least December, the index provider said on Tuesday.FTSE Russell said the deferral would allow for an extended observation period to assess the effectiveness of market reforms aimed at improving transparency and integrity in Indonesia's capital markets. Index additions have been on hold since February.The move comes against the backdrop of Indonesian markets facing continued scrutiny from global index providers over market transparency and investability. Index provider MSCI said in late-June it would extend its review of the market until November to assess reforms rolled out by Jakarta, while S&P Dow Jones Indices warned in early-July that Indonesia could be downgraded to frontier-market status.On Tuesday, FTSE Russell said it had reviewed measures introduced by Indonesian authorities, including the disclosure of shareholder ownership data above 1%, publication of a high shareholding concentration list and enhancements to investor classification reporting.The index provider will proceed with some changes at its September review, including industry classification updates, quarterly share updates, free-float decreases, capping updates and deletions linked to index eligibility screens.