Global fixed-income markets continue to undergo significant repricing in 2026, with yields rising sharply across the United States, Europe, the United Kingdom, and Japan. China remains the major exception, as accommodative monetary policy and persistent deflationary pressure continue to push government bond yields lower.
US Treasury yields have risen significantly across the curve. The 2-year yield stands at 4.764%, up almost 129 basis points year-to-date, while the 5-year has risen to 4.976%. The 10-year Treasury yields 5.196%, and the 30-year stands at 5.558%.
The curve is now positively sloped and steepening, marking a significant change from the inverted yield curve that characterized much of 2023 and 2024. The front end has experienced the greater selloff, suggesting that markets are repricing the expected terminal policy rate higher rather than anticipating near-term cuts.
The impact is visible in bond-market performance. The Bloomberg US Aggregate Bond Index is down 2.28% year-to-date and yields 5.51%. While current yields provide meaningful carry, mark-to-market losses have dominated as interest rates have moved higher.
European sovereign markets are facing their own challenges. Germany's 10-year Bund yields 3.438%, while the 2-year stands at 3.120%.
Peripheral spreads remain an important risk indicator. France's 10-year OAT yields 4.840%, approximately 140 basis points above the German Bund, while Italy's 10-year BTP yields 4.523%, or around 109 basis points above Germany.
The fact that France now trades at a wider spread to Germany than Italy is an unusual reversal of the traditional risk hierarchy and reflects the market's focus on French fiscal and political uncertainty.
UK Gilts remain among the most heavily pressured developed-market government bonds. The 2-year Gilt yields 4.881%, the 10-year 5.394%, and the 30-year 5.879%.
The approximately 196-basis-point gap between UK and German 10-year yields highlights the UK's more persistent inflation challenge and fiscal dynamics. The Bloomberg Sterling Gilts Total Return Index is down 2.32% year-to-date, while corporate bonds have performed somewhat better as credit-spread compression has partially offset rate-driven losses.
China remains the clear global outlier. The 2-year Chinese Government Bond yields only 1.234%, while the 10-year stands at 1.656%, with both yields declining during 2026.
The gap between Chinese and US 10-year yields has widened to approximately 354 basis points. Persistent deflationary pressure and an accommodative PBOC stance continue to support Chinese bonds domestically, although the combination of low yields, currency risk, and geopolitical considerations remains less attractive for foreign investors.
Japan is experiencing one of the most significant structural changes in global fixed income. The Bank of Japan's policy rate stands at 1.25%, while the 2-year JGB yield has risen to 1.929%, the 10-year to 3.012%, and the 30-year to 4.058%.
The 10-year JGB is now at its highest level in decades. As domestic Japanese yields become increasingly attractive, the possibility that institutional investors could repatriate capital currently invested in foreign bonds represents an important consequence of the ongoing normalization process.
