U.S. Bond Yields Surge Amid Global Sell-Off and Easing Financial Conditions

U.S. Treasury yields climbed noticeably at the start of December, driven by a broad global sell-off in government bonds and a surge in corporate bond issuance that signaled improving financial conditions and growing investor appetite for risk.

Benchmark U.S. yields rose by more than five basis points, reaching their highest level in about a week. The upward momentum accelerated during Tuesday’s session, particularly in long-term Treasuries, which ended the day up nearly eight basis points following a wave of large corporate bond offerings totaling around $15.8 billion.

The strong pace of corporate issuance reflects a more favorable financial environment in the United States, supported by the Federal Reserve’s rate cuts and a resilient performance in equity markets. These new corporate bonds also compete with Treasuries for liquidity, contributing to the pressure on government bond prices.

Globally, government bonds continued to decline on Tuesday, extending a sell-off that began after signals from the Bank of Japan hinting at a possible rate hike in December. The initial drop in Japanese bonds quickly spilled over to other major markets, including the U.S., intensifying the rise in yields.

Higher U.S. Treasury yields also weighed on gold, reducing demand for the metal as a non-yielding asset and putting downward pressure on global gold prices.

Overall, markets are navigating a complex landscape shaped by expectations of tighter monetary policy in Japan and rising U.S. yields—a combination that has amplified volatility across global bonds and precious metals.