Goldman Sachs Analyzes the Drivers Behind the Global Bond Yield Surge

George Cole, Head of European Rates Strategy at Goldman Sachs, notes that government bond yields in the US, UK, Germany, and Japan have risen to multi-decade highs, with the selloff driven by a confluence of fundamental factors including widening fiscal deficits, AI-related borrowing, economic resilience, and energy price shocks. Current low bond market volatility, combined with competition between governments and AI firms for the global pool of savings, has pushed interest rates higher. Five-year bond yields may have room to decline in the future, making them a more effective portfolio hedging tool.