Why are U.S. 2-year Treasury yields, 10-year note, global bond markets down in France, Germany?

U.S. Two-year Treasury yields, benchmark 10-year Treasury note were down after hitting historic highs. Global bond markets too have been under a relentless selloff in recent weeks as the US-Israeli war with Iran pushed up energy prices again, complicating the inflation outlook and further straining already stretched public finances.

Bond yields have been sliding since Thursday, reversing a rout in prices that earlier pushed the 10-year US yield to its highest level since 2002, as investors returned to the market, while Wall Street stocks edged higher with the decline in yields. The day's move in bonds follows the largest quarterly rise in 10-year yields since 1994.

Why are 10-year Treasury Note, Two-year Treasury Yields Down?


Two-year Treasury yields were showing their biggest decline in a single session since August 2025. The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, was last down 10.39 basis points at 4.783 per cent.

The yield on benchmark US 10-year notes was last down 5.65 bps at 5.237 per cent. It earlier reached 5.34 per cent, its highest since the spring of 2002. The 30-year bond yield was down 3.33 bps at 5.6057 per cent after reaching a fresh 2002 high earlier.

The recent selloff in bond prices has pushed Treasury yields to levels that are now attractive, said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut. "I'm not suggesting the global bond selloff is over. I am suggesting it's probably overdone," he said.

Risks to US equities are likely to increase as the bond market comes under further pressure, with rising Treasury yields beginning to spill over into credit markets, Jefferies said in its latest Greed & Fear report, ANI reported

The brokerage said the US 10-year and 30-year Treasury yields, at 5.34 per cent and 5.69 per cent, respectively, had reached their highest levels that week since April 2002 and May 2002, respectively. The sharp rise in yields is becoming increasingly important for equities, particularly amid the emergence of a more hawkish Federal Reserve.

Jefferies said the two-year Treasury bond yield had reached a peak of 4.96 per cent that week, or 108 basis points above the midpoint of the federal funds rate, which it viewed as a sign that more rate hikes were coming.

Bond Yields Impact

High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments. Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the U.S. economy remains solid and governments’ insistence to continue to spend much more money than they bring in.

It all sent the yield on the 10-year U.S. Treasury toward 5.34 per cent and its highest level since 2002. But the 10-year yield relented later in the day and pulled back to 5.23 per cent from 5.29 per cent late on Wednesday. That helped stocks on Wall Street recover their losses and turn higher.

Still, the 10-year Treasury yield remains much higher than it was last week, when it was below 5 per cent, and from before the war with Iran began, when it was below 4 per cent.

Two-year Treasury Yields, 10-year Treasury Note Prediction

Treasury yields extended gains, and the benchmark 10-year Treasury note hit a 24-year high, after closing out September with its biggest quarterly gain since 1994. But yields turned lower as buyers stepped in, and further declined after Fed Vice Chair Philip Jefferson suggested the central bank may be patient before hiking rates again, following a 25 basis point hike in September.

The two-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, dropped nearly 10 basis points and was poised for its biggest daily drop since August 2025.

"Even though valuations have come down, the market's still not cheap, so I'm not bearish on the equity market. We can chug along, but I expect higher volatility in both equities and bonds," said Scott Welch, chief investment officer at Certuity in Potomac, Maryland.

"Everybody's adjusting to a new normal. There's nothing particularly scary about what's happening in the markets right now; it's just a little bit different than what people have been used to operating in over the past few years, and it's going to take some adjustment," Welch said.

Global Bonds Yields

Yields were surging around the world as soaring energy costs fan inflation and as the boom in AI and data center building lifts expectations for growth and for where short-term interest rates will settle. However, there has been a correction

The German 10-year yield, the euro zone benchmark, was down 6.5 basis points on Friday, as investors preferred the relative safety of German bonds compared to their euro zone counterparts. Bond yields move inversely with prices.

In France, the 10-year yield was down 4 bp at 4.892 per cent, pushing the gap between the German and French 10-year yields as wide as 149 bps, the widest level since the euro zone debt crisis in 2012.

"I wouldn't call it a crisis yet, but it looks like it has the potential to be one," said George Lagarias, chief economist at Forvis Mazars. "If it goes on for a couple more weeks then we'll be talking about a crisis in the bond market," Lagarias said.

Japan's long-term bond yields hit multi-decade highs on Friday.