German, French bond yields hit worst levels in over 15 years

Germany's 10-year Bund yield rose to 3.21% on Monday, its highest since May 2011, while France's 10-year government bond yield climbed to 4.06%, a level not seen since June 2009. The moves are part of a broader global bond selloff that has intensified over the past two weeks, with investors demanding higher compensation for holding government debt amid ballooning fiscal deficits.tradingeconomics+1

A Global Reckoning Over Debt

The selloff has been sharpest in countries where debt stocks are high and political dysfunction is acute. Robin Brooks, a former chief economist at the Institute of International Finance, wrote on Monday that 10-year-10-year forward bond yields — what markets price for the 10-year yield a decade from now — are "rising all over the place," with Japan, the UK, France, and Italy seeing the steepest increases over the past ten days.robinjbrooks.substack

Japan has been hit hardest. Its 10-year bond yield surged to as high as 2.93% last week, the highest since 1996, extending a rout in Japanese government bonds that has pushed 30-year yields above 4% for the first time ever. Brooks described Japan's bond market as "deeply distressed," with large depreciation pressure building on the yen.finance.yahoo+2

Bear Steepening and Oil

The proximate trigger has been a pronounced bear-steepening of the U.S. yield curve since the Federal Reserve's July 29 meeting, which has dragged up long-term yields globally. A spike in oil prices tied to the unresolved conflict in the Persian Gulf has added to the pressure, with energy costs fueling inflation expectations that have plagued bond markets since early 2026.spglobal+2

BlackRock ↘ 2.27% noted in its weekly commentary that rising long-term bond yields and rising earnings forecasts are not contradictory signals but rather reflect a broader "global bond reset" underway since 2021.blackrock

Fiscal Policy in the Crosshairs

Brooks argued the focus on individual catalysts misses the deeper problem. "When you have a lot of debt and run unsustainably large budget deficits, you're extremely vulnerable to any old shock that comes along," he wrote. "It's not about the shock, but — instead — the mess we are making of fiscal policy on a global scale".robinjbrooks.substack

Switzerland and a handful of low-debt countries remain the only outliers, underscoring what Brooks called the now-obvious "benefits of responsible fiscal policy." For policymakers in Berlin, Paris, and Tokyo, the bond market's message is growing harder to ignore.