Soured sentiment sends yields soaring in the US and UK
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Why are UK 30‑year bond yields hitting their highest level since 1998?
UK 30 year guilt yields hit their high point of the century so far, pushing the pound down more than the Aussie this morning and helping the US dollar up a little as well. Yields higher in the US as well, again over fiscal concerns and uncertainty around tariffs. Stocks also feeling the pressure, particularly tech with NVIDIA breaking out below its fifty-day moving average, and the first bit of jobs data as well today. Jolts is out later on. Wednesday, it's the third of September twenty twenty five. It's the morning call from Nab. Good morning. Well, big falls in the US on their first day back from the long weekend, so naught point eight percent off the Nasdaq. That's after recovering uh a fair bit from session lows, not point seven percent off the S P and the Dow is not point six percent lower, shares down in Europe too, the Eurostocks fifty closed down one point four percent, the DAX is down two point three percent.
It's been on a a pretty tight flat trading range actually since the start of May, hasn't it? And bond yields much higher. Up five basis points for ten year treasuries, up to four point two eight percent, up eight for ten years in Canada, up five in France and the UK as well, and up four basis points for ten year bunds. In the UK though, thirty year yields were up uh eight basis points to five point seven two percent, which is the highest it's been since nineteen ninety eight. Uh thirty year yields in the US also high, almost up to five percent. Perhaps no surprise. The pound is well down as a result of all of that, losing 1.2%. The Aussie is down 0.6%. Same for the Euro. The US dollar is up half a percent on the DXY.
And oil is well up. WTI is up 2.6%, 1.5% higher for Brent, which is well over 69 a barrel now. And it's Nab Sky Masters who is with me today. Always good to talk to Sky when there's lots of bond movement. And we've certainly got lots of that today. But this time uh it's the UK that's attracting uh I mean the thirty year yields are up in the United States, as I said, but the UK attracting a lot of focus. There's global factors at play, of course, but this is really this continued concern, isn't it, about the UK's fiscal position. They haven't got growth, they've got rising government debt, there's uh a budget that's likely to Extend taxes, uh rising yields obviously puts up borrowing costs, so the you know, the and that adds to that lack of lack of confidence.
So they're in this vicious circle. It's hard to imagine a way out for them in the short term.
How is fiscal dominance driving higher long‑term yields in the UK and US?
Yes, you're correct, Phil. Um, you know, there there's been a lot of focus overnight on price action that we've seen in in bond markets and i in particular um the UK with headlines that yeah, the the thirty year guilt um reached its highest level since nineteen ninety eight, uh o overnight. Um, so quite quite a bit of quite a bit of focus in bond markets and and yeah, it it i it is all about Um concerns about um government budget deficit positions and and the implications for bond issuance. So it's actually nothing nothing new. Nothing new really happened overnight on that front. But you're just continuing to see this this slow grind higher Higher in bond yields. Uh, which is being led by your your the longer end of the curve.
So so really being led by the by the um thirty years. And and as you said in your introduction, you know, yields are higher overnight. I in my reading I've got sort of ten year guilt's up five basis points. Um ten year treasuries, you did say they're up five basis points. They are from from yesterday's close. But if I look at sort of overnight price action from Sydney close, ten year treasure yields are up about two basis points. They did push higher earlier in the session, but they did retrace some of the losses post the ISM report, and we can dig into that in a second. So
those that that that UK figure though, the highest since nineteen ninety eight, just to give some context, nineteen ninety eight is the year that Google was founded and Apple released the first IMAC in in nineteen ninety eight.
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Chapters
8 chapters
1
Why are UK 30‑year bond yields hitting their highest level since 1998?
0:01–2:25
2
How is fiscal dominance driving higher long‑term yields in the UK and US?
2:25–4:42
3
What impact are rising yields having on tech stocks like Nvidia?
4:42–7:04
4
How could US tariff disputes and court rulings affect Treasury yields?
7:04–9:43
5
What does the latest US ISM manufacturing report reveal about the economy?
9:43–13:06
6
Why is the Eurozone CPI data influencing expectations for ECB rate cuts?
13:06–14:49
7
How will the upcoming JOLTS jobs data shape the Fed’s September decision?
14:49–15:34
8
What are NAB’s GDP forecasts for Australia and their implications for RBA policy?
15:34–15:41