Dr. Amonthep Chawala, Assistant Managing Director and Head of Research at CIMB Thai Bank, warned that the bond market could explode, as the market does not believe the US government will stop accumulating debt and may punish it by demanding higher interest rates. Despite the US Treasury Secretary's measures to suppress long-term bond yields, the market remains unconvinced, with the 30-year US Treasury yield surging above 5.28% and showing signs of further increases. Additionally, he highlighted the 30-year Japanese government bond yield, which has risen from 3% at the start of the year to above 4%, and may continue to climb if the Bank of Japan's rate hikes are insufficient. Meanwhile, Japan's public debt exceeds 200% of GDP, which could lead to a sell-off in US Treasuries and put pressure on global yields. The impact of higher yields will increase financing costs for businesses and home loans, as well as reduce asset values, but it has not yet reached a financial crisis level, unless additional triggers emerge, such as a decline in AI investment or rising unemployment. Therefore, he advises investors to diversify their investment portfolios.
Article states 30-year JGB yield has risen from 3% to above 4% and may climb further if BOJ hikes are insufficient.
Article reports 30-year US Treasury yield surging above 5.28% with signs of further increases due to market disbelief in US debt management.
