Discover more

Higher yields mark a durable shift to a tighter-money regime in which bonds regain income and diversification value, while investors should favour selected floating-rate, emerging-market and Asian high-yield exposures over broad directional bets on core government bonds.

• The US-Iran conflict and oil prices above USD 100 a barrel sustained inflation concerns, while the ECB raised its key rate by 25 basis points to 2.50%.
• The US 10-year Treasury yield approached 5% and the 30-year yield hovered just below 5.4%, but these levels remain below long-run averages despite appearing high against the post-2008 period.
• The US 10-year yield has traded within roughly a 90-basis-point range since the start of the second Trump administration, suggesting an orderly adjustment rather than a bond-market crisis.
• Emerging-market debt attracted more than USD 214 billion of foreign inflows through July, versus about USD 178 billion in the same period a year earlier; local-currency debt benefited from a weaker dollar, attractive domestic rates and stronger confidence in emerging economies.
• As of 3 September 2026, Asian high yield offered a 7.6% yield-to-worst and 5.20% year-to-date return, while US floating-rate notes offered a 4.2% yield-to-worst and 2.96% year-to-date return.

Takeaway: Investors should increase bond allocations from historically low levels, focus on floating-rate notes, emerging-market debt and Asian high yield, and manage rates and credit tactically across countries and maturities rather than making large outright bets on Treasury yields.