Macro Playlist

Since the beginning of the year, 30-year sovereign bond yields have risen almost everywhere. The increase has reached 70 basis points in Japan, 62 in the United Kingdom, 47 in the United States, 37 in France, 29 in Canada and 27 in Germany.

Why this synchronized increase?

The first reason is fiscal. Governments continue to issue large amounts of new debt, while higher military spending adds further pressure. Investors are demanding higher compensation to finance countries whose debt trajectories appear less sustainable.

The second reason is cyclical. The global economy is holding up well, but inflationary pressures remain, notably because of the war in Iran. Investors want to be compensated for these risks.

The third reason is more structural. Competition for capital is intensifying. Governments are no longer the only borrowers. Companies are financing unprecedented investments in artificial intelligence. As a result, a growing amount of debt must be absorbed by the market, naturally putting upward pressure on rates.

Interestingly, Germany and Canada have recorded the smallest increases among major developed countries. Both retain a AAA credit rating and benefit from a stronger reputation for fiscal discipline. In a context where markets are reassessing sovereign risk, that credibility becomes a tangible advantage — one that should not be wasted.

The bond market’s message is simple: greater fiscal discipline is needed. This is not necessarily a call for austerity, but in a world where investors can choose among many borrowers, those using debt to finance productive, growth-enhancing projects will be favoured.