Bonds: Rising yields worldwide

Concerns about inflation and interest rates are weighing on the bond market. Yields are rising, often to multi-year highs; in Japan, they have even reached their highest level since 1997. Trading volume in corporate bonds remains relatively low.

May 15, 2026. FRANKFURT (Deutsche Börse). The Middle East conflict continues to dominate the bond markets. “Energy prices have risen further—and the U.S. president’s visit to China has so far failed to bring any real movement in the Iran conflict,” reports Helaba analyst Ulrich Wortberg. Bond markets in particular are unable to stage a sustained recovery. “Inflation and interest rate concerns are weighing on the market.”

Traders are therefore exercising caution, as Gregor Daniel of Walter Ludwig Wertpapierhandelsbank explains. “Trouble looms from many directions—see also Japan and the UK, as well as the growing budget deficits in Germany.” Yields on German government bonds have risen over the course of the week. Ten-year German government bonds are yielding 3.1 percent on Friday morning, up from 3.0 percent a week ago.

United Kingdom: Yields at their highest level since 2008

In the U.S., the yield on 10-year U.S. Treasuries has now climbed to 4.53 percent. That is the highest level in eleven months. “The yield on the 30-year U.S. Treasury bond has surpassed the closely watched 5 percent mark,” reports Arthur Brunner, who trades bonds for ICF Bank. The trigger was the latest inflation data: U.S. consumer prices rose by 3.8 percent in April compared to the previous year—well above the target of 2 percent. In Japan, yields on 20-year bonds have even climbed to their highest level since 1997.

But the situation in the UK has also come into focus. “Within the Labour Party, pressure is mounting on Prime Minister Starmer: 92 MPs are already calling for his resignation, bringing a no-confidence vote within reach,” notes Commerzbank analyst Erik Liem. For the markets, the main concern is the implications for future fiscal policy. “Should a more spendthrift candidate prevail, this is likely to drive up yields on British government bonds further.” They are already trading at their highest levels since 2008. 

New Fed Chair in the U.S.

Kevin Warsh succeeds Jerome Powell as chair of the Federal Reserve today, Friday. Bernd Weidensteiner of Commerzbank points out that the inflation rate has been above the 2 percent target for over five years. “Warsh will therefore not be able to deliver the rapid interest rate cut that President Trump has repeatedly demanded,” the analyst notes. For that to happen, inflation would first have to show clear signs of retreating.

Corporate Bonds Show No Clear Trend

General caution is evident in the corporate bond market. “No clear trend is discernible,” says Daniel. He reports purchases and sales of bonds from a wide variety of companies, maturities, and currencies. “Trading volumes are rather thin,” Brunner adds. The Mutares bond maturing in 2027 (NO0012530965) is showing slightly weaker performance at 101.4 percent. “The company had announced the repurchase of 25,000,000 euros of the bond’s total outstanding face value of 250,000,000 euros at a purchase price of 101 percent.”