US Treasuries rebounded from a bruising global bond selloff as pressure in European markets fueled demand for haven assets, pulling 10-year yields down from a 24-year high.
The bounceback in the US bond market gathered pace on Thursday as concern around France’s fiscal and political situation pushed euro-area risk premiums higher. Long-term UK bond yields also shot past 6%.
In the US, haven appetite helped push the yield on two-year Treasuries lower by as much as 13 basis points to 4.75%, on pace for the biggest decline since August 2025.
“Today is very much not about US fundamentals and US data,” said Izaac Brook, US rates strategist at RBC Capital Markets. “Everybody is looking at overseas yields and saying, ‘You need to move into safety, buy Treasuries.’”
The shift marked a respite from the bond selloff that has been racing through world markets for weeks as the oil-price shock of the US-Iran war ripples through the global economy, pushing investors to bet central banks will further raise rates. Massive government borrowing, resilient growth and fundraising for artificial-intelligence investments that’s flooding the market with new debt also contributed to the downturn.
Thursday’s drop in short-term US yields — part of a volatile trading session — picked up after a softer-than-expected manufacturing report pointed to some cooling in segments of the US economy, driving traders to dial back bets on how steeply the Federal Reserve will raise interest rates over the next several months.
Fed Vice Chair Philip Jefferson also said policymakers may need more time to decide on their next move, with traders pricing in about a one-in-four chance of an interest-rate increase this month.
Swap spreads also plunged at a rapid pace, signaling an unwinding of crowded positions put on over the past couple of weeks.
In Europe, the spread between Italy and Germany’s two-year yields almost doubled to 55 basis points on Thursday, the biggest daily jump since 2020 on a closing basis. The equivalent gap for France rose as much as 22 basis points, the most since 2012.
“France has been slowly but steadily breaking,” said Mike Riddell, lead manager of Fidelity International’s Strategic Bond Fund. “But today feels like the first day that broader financial markets have noticed.”
Global government bonds just posted their worst quarter since 2024, according to a Bloomberg index. The slump on Thursday sent the yield on UK 30-year bonds to 6% for the first time since 1998. Some analysts and investors say US long-dated bonds could also reach that level.
In Washington, the Trump administration has tried slow the selloff by stepping up its buybacks of longer-dated bonds, only to see rates continue to climb. At an operation on Thursday, the Treasury Department repurchased $6 billion in debt maturing in 10 to 20 years.
What Bloomberg Strategists say…
“Treasuries might look cheap against stocks, GDP and the global cycle, but on their own historical terms they have more to fall before they become oversold and ready for a durable bounce.”
—Simon White, Macro Strategist, Markets Live. For the full analysis, click here.
Investors will seek clues on the US economy’s health and the Federal Reserve’s next steps from Friday’s payroll numbers, which are forecast to have grown by around 88,000 in September, according to a Bloomberg poll of analysts, nearly half the prior month’s rise.
With assistance from Edward Bolingbroke, Masaki Kondo and James Hirai.
This article was generated from an automated news agency feed without modifications to text.
