Global Bond Markets Sell Off
NEW YORK--Major government bonds markets in the U.S., Germany and the U.K. suffered broad selloff as hopes of solution to the euro-zone's debt crisis generated a strong rally in stocks and commodities.</br></br>The selling over the last three sessions has boosted benchmark yields significantly from their historic lows made last week. The quick reversal of the flight-to-quality trade suggested that as yields tumbled to rock-bottom levels, any corrective selling would likely be relatively sharp.</br></br>While the situation in the euro zone remains fluid, optimism has swirled over the past two sessions that under pressure from other world leaders, policy makers from the euro zone may need to be more aggressive in preventing the debt crisis from deteriorating. A blowout of the crisis in the euro zone will not only undermine the region's banking system and its economy but a spillover to other regions could fuel another global financial crisis.</br></br>"Treasurys continue to sell off as risk is being put back on," said Sean Simko, who manages a $7 billion fixed-income portfolio at SEI. "Investors are now sensing that the European government is acknowledging the severity of the current situation attempting to take decisive action."</br></br>For now, the optimism on the euro zone has pushed up Treasury yields noticeably from their recent lows. The benchmark 10-year yield, which moves inversely to its price, has risen about 0.30 percentage point from 1.67% set on Friday, which is the lowest level since 1940s. The 30-year yield has jumped more than 0.30 percentage point from last week's trough of 2.738%.