SYDNEY, Sept 28 (Reuters) - Benchmark 10-year U.S.
Treasury yields topped 4% on Wednesday as the ongoing collapse
of British gilts shook confidence in bond markets globally,
leading investors to demand fatter risk premiums.
The 10-year yield rose as far as 4 basis points
to 4.004% in Asia trade, its highest in 12 years. It is up about
50 basis points in a week.
Five-year yields hit a 15-year high of 4.251%.
Two-year Treasury yields were steady at 4.287%.
Yields rise when bond prices fall and global bonds prices,
already on course for a terrible year, have extended losses as
fear about inflation collides with market stress.
Persistent inflation has the U.S. Federal Reserve sounding
ever more hawkish about interest rates - a view reinforced by
relatively strong U.S. housing and confidence data overnight.
On top of that, traders suspect Japan could sell Treasuries
to fund its intervention in currency markets after it acted to
stabilise a sinking yen last week. Several other Asian countries
have also been intervening to support their currencies, likely
funded, too, by the sale of U.S. Treasuries.
Some funds might also need to cover losses suffered in the
gilt market, where yields on two-year to 30-year tenors are up
more than 100 basis points over the past three days.
"With one of the largest bond markets in the world (gilts)
potentially experiencing a foreign buyers' strike, recent events
may lead the market to ask: which country is next?" said George
Saravelos, head of global FX strategy at Deutsche Bank Research.
"No wonder the risk premium on bonds globally is on the
(Reporting by Tom Westbrook; Editing by Ana Nicolaci da Costa)