Key Facts
• Global bond yields surged in 2025, with long-term yields steepening significantly.
• BlackRock attributes this to higher neutral interest rates, not fiscal crisis fears.
• U.S., U.K., France, and Japan saw sharp increases in long-term bond yields.
• Germany’s 30-year bond yield rose from negative to around 3.25% in four years.
• U.K. long-term yields reached levels last seen in the late 1990s.
• France’s fiscal deficit is the largest in the Eurozone, with debt rising €5,000 per second.
• Despite fiscal challenges, France’s recent bond auction saw strong demand.
• The 10-year yield spread between French and German bonds narrowed to 78 basis points.
• BlackRock cites AI investments and fiscal policies as factors raising neutral rates.
• Investors expect France to stabilize its fiscal situation, supporting bond demand.
Summary
Global bond yields have risen sharply in 2025, reflecting market expectations of persistently high interest rates rather than fiscal crisis concerns, according to BlackRock. The investment firm highlights that the increase in neutral interest rates, driven by factors like AI-related investments and accommodative fiscal policies, has contributed to this trend. Countries such as the U.S., U.K., France, and Japan have experienced significant steepening of long-term bond yields. Germany’s 30-year bond yield, which was negative four years ago, now hovers around 3.25%, while U.K. yields have reached late 1990s levels. Despite France’s record-high fiscal deficit in the Eurozone, its recent bond auction attracted strong demand, with investors optimistic about future fiscal stabilization. BlackRock emphasizes that the bond market is adjusting in an orderly manner, with long-term bonds incorporating premiums to encourage purchases.
