Rising Bond Yields Amid Global Economic Concerns

German long-term bond yields soared to a two-month high on Thursday, fueled by escalating investor concern over the weakening fiscal outlook in the United States. This anxiety intensified following lackluster demand for a U.S. Treasury auction the previous day.

Analysts suggest that the unease is partly driven by President Donald Trump's tax bill, which progressed towards a House vote, potentially influencing U.S. borrowing costs. According to Samy Chaar, chief economist at Lombard Odier, the current budget proposal is unappealing to foreign investors requiring a premium for financing, possibly resulting in a subdued dollar or elevated yields.

Despite the global pressure, Chaar does not foresee an immediate U.S. funding crisis. The bond market response was further compounded by tepid interest in a $16 billion U.S. Treasury bond sale, along with recent downgrade of the U.S. credit rating.

(With inputs from agencies.)