Rising US Treasury yields confuse international markets

Economist Mohamed El-Erian said that the flexible labor market indicates that the United States is leading the global economy and that high yields on US bonds are putting pressure on other countries such as the United Kingdom, France and Germany, according to what was reported by the American Bloomberg Network.

US Treasury bond prices

US Treasury prices fell broadly, sending 10-year bond yields to their highest levels since 2023 after a jobs report showed that employment in December rose by the most in nine months.

What does the US jobs report mean?

“This confirms, firstly, that the economy remains strong and secondly, that the United States continues to significantly outperform other advanced economies,” El-Erian, president of Queen’s College Cambridge, said in a statement to Bloomberg following the release of the jobs report.
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This issue of dispersion will become very important as we move forward in the future,” which indicates that America will continue in this manner in the coming period in light of China’s decline and great suffering, which also says that it will continue in this manner during the foreseeable months of 2025.

Bonds of other countries

The wave of bond selling spread to other markets, and the yield on British ten-year bonds rose after the release of US jobs data, which led to higher borrowing costs and increased the risks of entering a vicious cycle of depreciation for public finances.
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Al-Erian said: “The United States is leading a global selling wave of bonds,” adding that rising yields reveal weaknesses around the world. The American market has a major impact as investors grapple with steady inflation, strong growth, and uncertainty about Trump’s agenda.
He continued: “What they cannot do is simply blame the United States and stop there. They must organize their own affairs.”

Treasury bonds and the rise of the dollar

The dollar rose on Monday for the third session in a row, benefiting from the decline in Treasury bond yields, but they remain high due to fears that US President-elect Donald Trump could impose customs duties, while the weak performance of the pound sterling has continued recently.
US Treasury bond yields took an upward trend, with 10-year bonds recording their highest level in eight and a half months at 4.73%, as the strength of the economy and potential tariffs revived concerns about inflation and strengthened expectations that the Federal Reserve will reduce the pace of cutting interest rates.

US economic forecasts

Joseph Trevisani, an analyst at FX Street in New York, said: “Most of the economic data released was a little stronger than expected, so if tomorrow we get stronger than expected wage data in the non-farm sectors, this is another indication that the economy is not weakening and that “Inflation will increase the pressure.”
“We will also have a Trump administration that will change everything,” he added.
The dollar index, which measures the performance of the US currency against a basket of six major currencies, rose 0.15% to 109.18 points.