The interest rate on the 10-year US bond is at the highest level in the last 16 years

While official interest rates around the world rose to the highest level in recent years due to monetary tightening measures, persistent inflation concerns increased selling pressure in bond markets.

Despite the possibility of the current conflicts and tensions in the Middle East spreading to wider circles, bond interest rates continued their upward trend.

Analysts reminded that interest rates and bond prices move in opposite directions and stated that rising bond interest rates actually mean that “bond prices are falling and bond sales are increasing.” .

While concerns that the US Federal Reserve (Fed) could keep the policy rate at these levels for longer than expected supported this pressure, macroeconomic data showing that economic activity in the country did not slow down at desired level also played an important role in this trend.

BOND INTEREST RATES BREAK A RECORD

While the US 10-year bond rate rose about 30 basis points last week, hitting its highest weekly close since July 17, 2007, it also rose about 6 points to 4.99 percent on the first day of negotiation of the new week.

Germany’s 10-year bond interest rate is near a 12-year high at 2.94 percent, and the UK’s 10-year bond interest rate is near a recent 12-year high. 15 years with 4.68 percent.

France’s 10-year bond interest rate is at a 12-year high of 3.56 percent, Italy’s 10-year bond interest rate is at a 10-year high of 3.56 percent. 4.93 percent and the interest rate on Japan’s 10-year bonds is at 0.87 percent.

Analysts noted that strong concerns about inflation persist, especially in the US, and macroeconomic data show that the economy is still hot, and stated that this situation is the main reason for the selling pressure in bond markets.

Analysts noted that prices in money markets were predicting that the Fed would likely leave the policy rate steady over the next 3 meetings, but Fed Chair Jerome Powell’s remarks last week that he could raise interest rates again if necessary led investors to be cautious.

Recalling that many countries, especially the US, have upcoming bond auctions, analysts said that despite the increase in bond supply, central banks bear the burden of bond demand in developed countries and that the impact of this situation on bond interest rates is limited.

IT ALSO AFFECTED THE STOCK MARKET

While the upward trend in bond interest rates significantly affects the decision-making processes of investors in global markets, this causes increased volatility in stock markets.

Analysts said investors’ risk perception came into play as bond yields rose as high as 5 percent and selling pressure increased in stock markets as yields at these levels led to some investors to buy bonds.

Analysts stressed that rising bond interest rates also increase corporate financing costs and play an important role in the downward trend in stock markets, due to concerns that they may negatively affect the profitability of companies.

This development shows a mixed trend in the European stock markets, while in the US index futures contracts fell by around 0.3 percent. (AA)