The global bond market has slipped its central-bank anchor. The days of bond nirvana, where seemingly every month brought lower yields--and higher prices--are over for now... But the rally pushed bond valuations to extraordinarily stretched levels. And now the tide has turned: Long-dated bond yields have shot higher. Thirty-year U.S. Treasury yields have risen 0.23 percentage point in a week.


The move has its roots in Japan, as disappointment with BOJ inaction at the end of July caused a selloff in Japanese government bonds. Then markets were disappointed again by the European Central Bank last week. Now both the ECB and BOJ are working on potential changes to their policy mix: In both cases, investors fear they will be less supportive of long-dated bonds. That has global consequences: The rally in U.S. Treasurys was part of a global move; the backup is just the same. If it were fears around the Fed driving the market, it would be short- and intermediate-maturity bonds that would be suffering more.

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