Global government bond yields reach decade highs amid structural demand shortage

Economist Mohamed El-Erian told CNBC on Friday that the global sell-off in government bonds will probably continue. He said the main problem is that too many bonds are being issued and not enough buyers are available to purchase them.

This week, borrowing costs rose sharply in several major economies. The US ten-year Treasury yield reached its highest level since January 2025. In Japan, the equivalent yield passed 3% for the first time since 1996. German bond yields also hit their highest point in many decades.

El-Erian said traditional large buyers, including China, Japan, and Gulf countries, have cut their purchases because of domestic and geopolitical pressures. Norway's sovereign wealth fund is also reconsidering how much it invests in US government bonds. El-Erian identified the UK, Japan, and France as especially vulnerable.