Global Bond Sell-Off Deepens as UK 30-Year Gilt Tops 6% for First Time Since 1998

Government borrowing costs around the world surged to fresh multi-decade highs on Thursday, as investors dumped long-dated bonds amid fears over stubborn inflation, rising interest rates and ballooning national debts, according to Reuters.

The yield on the 30-year UK government bond climbed above 6 per cent for the first time since 1998, reaching 6.028 per cent, The Times reported. The benchmark 10-year UK gilt rose to a near 20-year high of 5.51 per cent. In the United States, the 10-year Treasury yield hit 5.34 per cent, its highest since 2002, after posting the biggest quarterly rise so far this century in the third quarter. Yields move inversely to prices.

France’s 10-year bond yield also reached its highest level since 2002, while Japanese borrowing costs touched multi-decade peaks, Reuters said. A renewed rise in oil prices linked to US-Iran tensions is driving yields higher, while elevated inflation has traders bracing for more interest-rate hikes.

Analysts point to heavy government borrowing as the deeper cause. The US debt pile has topped 40 trillion dollars, and debt as a share of economic output sits at or above 100 per cent across the G7 economies except Germany, according to Reuters.

The pain is spreading to borrowers. The rate on a 30-year home loan in the US topped 7 per cent for the first time since early 2025 last week, CNN reported. In London, the FTSE 100 fell 1.74 per cent, and the pound dropped to $1.32. The Times said Chancellor John Healey’s room to manoeuvre ahead of his first budget on October 28 has shrunk by around £10 billion as debt-servicing costs climb.

Markets are now pricing roughly a 37 per cent chance of another Federal Reserve rate increase in October, according to LSEG data, and expect nearly four more hikes over the next 12 months.

Sources

• Reuters — Why are world bond markets selling off again?
• The Times — UK borrowing costs rise to highest since 1998
• CNN — Bond market bust: a key rate just blew through another decades-old record