Why Bonds Have Been Wobbling Worldwide
Finance Why Bonds Have Been Wobbling Worldwide Bonds have been wobbling worldwide. The 30-year U.S. Treasury bond, now over 5%, is at its highest level since 2007. The British 30-year yield is surging to 6%. Japan spent years suppressing interest rates to virtually 0%. Now its 10-year is almost 2.8%, the 30-year, over 4%. Yields of German government obligations are rising as well. The immediate cause has been the fallout of the Iran war, but there‘s something far more fundamental at work. What has been happening in recent years is that governments have been weakening the value of their currencies. The most reliable metric for measuring that is gold. For a variety of reasons, the yellow metal has largely kept its intrinsic value for thousands of years. When you see gold prices change, what you’re actually witnessing is the changing values of currencies in which the gold price is denominated. The dollar price of gold per ounce was under $2,000 three years ago. Today its well over $4,000, even going over $5,000 a few months ago. Many other currencies are weaker than the dollar. What makes Japan particularly worrisome is that its huge national debt, which is proportionately more than twice that of the U.S.,