Yields on short-term debt issued by Chinese banks dropped to a record low after the central bank transitioned to the overnight repo rate as its primary policy anchor, in a move seen by markets as de facto easing.

Yields have put in what appears to be a trading high at 5.36% and are back into the yellow zone (around 5%). Real yields have dropped as well, with the 10-year down to 2.64%. It’s interesting that the current AI-related growth scare happened when the real yield poked its head above the economy’s trendline (potential real GDP growth). Perhaps the economy’s speed limit acts as a natural brake for real yields with respect to growth.

Yields are climbing almost daily all around the world as the bond selloff continues. What’s driving this selloff and how much higher can yields go? Bloomberg’s Ruth Carson answers some of your questions.

Yields are climbing almost daily all around the world as the bond selloff continues. What’s driving this selloff and how much higher can yields go? Bloomberg’s Ruth Carson answers some of your questions.

Yields were suppressed this morning, with the 10-year falling below 5.2%, allowing for equities to get off the mat and follow-through. However, they've reversed intraday and are now up, again, materially. 10-year yield was down 5 basis points yesterday, which opened the door for this rally. Now it's up 6 basis points today, almost back to 5.3%, and equities are fading from the highs. Impressive bounce this week for many risk-on names, but where do we go from here? Well, yields will have to settle in order to allow a *trending regime* to form. You will still have the crowd that says they don't matter, but that's simply not true. They absolutely still matter, in spite of equities whistling past them (for now). The pace & directionality of yields pose a repricing threat to forward expectations for risk assets, and they also put pressure on debt-driven capex, which has been the lifeblood of this economy. This morning's soft jobs data wasn't enough to keep yields down, which means that bond vigilantes are still looking for more resolution, in other places. The Treasury buybacks haven't worked either, and so logically, the only other potential catalyst on the table is, once again (and I know I sound like a broken record here), ending the war in Iran. If President Trump wants a clearer market backdrop, with less intraday fades and less week-to-week volatility, he will have to get this done. The sooner, the better.

Yields on the UK's government debt reached their highest since 1998, a global move also reflected in US and European bond yields. Economist Liz Martins of HSBC told Reuters the sell-off showed markets lack faith in governments' ability to get their debt under control

Yields on 10-year Treasuries are the highest since 2002 versus a comparable metric on the S&P 500 - the earnings yield. At a certain point, bonds will present a compelling investment proposition vs risk assets, but many investors say not yet since growth is still strong.