bonds

Published on
14/05/2026 – 14:35 GMT+2

Long-term US borrowing costs climbed to levels not seen since before the global financial crisis after the Treasury auctioned $25bn (€21.3bn) in 30-year bonds at a high yield of 5.058% on Wednesday, according to the department’s own data.

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The sale came only hours after the US Senate voted to confirm former Federal Reserve governor Kevin Warsh as the next chairman, succeeding Jerome Powell.

The auction result immediately complicated the backdrop for Warsh’s arrival at the central bank, underlining the pressure facing policymakers as inflation is rising.

At the time of writing on Thursday, US 30-year bonds are trading at 5.02% while 10-year notes are selling with a yield of 4.44%.

US inflation figures released earlier this week showed consumer prices rose 3.8% from April 2025 as the 10-week Iran war pushed energy costs higher and distanced inflation from the Federal Reserve’s 2% target.

Producer price data also pointed to persistent underlying cost pressures across the economy, reinforcing expectations that the central bank may struggle to ease monetary policy quickly.

Rising Treasury yields have broad implications for the economy because they influence borrowing costs on mortgages, corporate debt and other forms of credit.

Higher long-term yields can also increase financing costs for the US government at a time when public debt is nearing $40 trillion (€34.1tn).

Investors are increasingly concerned that a combination of resilient economic growth, elevated energy prices and sustained government borrowing could keep inflationary pressures alive despite two years of restrictive monetary policy.

The yield on the benchmark 30-year Treasury bond being auctioned above 5% is a symbolic threshold last reached in 2007 before the onset of the global financial crisis.

While market conditions today differ substantially from that period, the move nonetheless underscores the sharp repricing that has taken place in global bond markets over the past two years.

Kevin Warsh inherits a difficult policy environment

Kevin Warsh takes over the Federal Reserve at a delicate moment for the US economy.

The former Morgan Stanley banker and Fed governor has previously argued in favour of maintaining the central bank’s credibility on inflation, while also signalling support for reforms to the institution’s communication strategy and balance sheet policies.

Warsh’s confirmation comes as financial markets remain divided over how aggressively the Federal Reserve should respond to persistent inflation pressures.

Some investors believe rates may need to stay higher for an extended period, while others warn that maintaining tight monetary conditions for too long could weigh heavily on economic growth and employment.

The main driver of the rise in inflation is the current disruption to global energy markets caused by the Iran war which also leaves the central bank at the mercy of geopolitics and not able to effectively control the situation.

Analysts stated that Wednesday’s Treasury auction illustrated the immediate challenge confronting the incoming Fed chair.

Elevated bond yields can help tighten financial conditions without additional rate increases from the central bank, but they can also amplify risks for heavily indebted households, businesses and the federal government itself.

For Warsh, the market reaction served as an early reminder that restoring confidence on inflation may prove more complicated than simply holding interest rates at restrictive levels.

WASHINGTON — The Trump administration is suspending a requirement that foreign visitors from countries that have qualified for the World Cup and have bought tickets for the soccer tournament pay as much as $15,000 in bonds to enter the United States, the State Department said Wednesday.

The department imposed the bond requirement last year for countries that it said had high rates of people overstaying their visas and other security issues as part of the Republican administration’s broader crackdown on immigration.

Travelers to the United States from 50 countries are required to pay the new bond, and five of those countries have qualified for the World Cup — Algeria, Cape Verde, Ivory Coast, Senegal and Tunisia.

Citizens from those five countries who have purchased tickets from FIFA are now exempt from the visa bond requirement. World Cup team players, coaches and some staff already had been exempt from the bond requirement as part of the administration’s orders to prioritize the processing of visas for the tournament.

“The United States is excited to organize the biggest and best FIFA World Cup in history,” Assistant Secretary of State for Consular Affairs Mora Namdar said. “We are waiving visa bonds for qualified fans who bought World Cup tickets” and opted in to the “FIFA Pass” system that allows expedited visa appointments as of April 15.

The waiver is a rare loosening of immigration requirements under the administration and will ease travel burdens for at least some visitors to the U.S. for the World Cup, which begins June 11 and is co-hosted by the United States, Canada and Mexico.

The administration has taken dramatic steps to restrict immigration in ways that critics say are incongruous with the type of unifying message that a global sporting event such as the World Cup is supposed to project.

For instance, the administration has barred travelers from Iran and Haiti, though World Cup players, coaches and other support personnel are exempt. Travelers from Ivory Coast and Senegal face partial restrictions under an expanded version of that travel ban, even without the visa bond exemption.

Foreign travelers also are facing new requirements to submit their social media histories, while the administration had deployed U.S. Immigration and Customs Enforcement agents at airports recently when Transportation Security Administration personnel were not being paid.

Those measures prompted Amnesty International and dozens of U.S. civil and human rights groups to issue a “World Cup travel advisory” that warns travelers about the climate in the U.S.

In a report this month, the main advocacy group for U.S. hotels blamed visa barriers and other geopolitical issues for “significantly suppressing international demand,” leading to hotel bookings for the soccer tournament that are far below what had initially been anticipated.

The American Hotel & Lodging Assn. said travelers are concerned about potentially lengthy visa wait times and increased fees, along with uncertainty about how they’re being processed to enter the U.S.

The bond requirements are part of the administration’s larger effort to clamp down on migrants who travel to the U.S. on temporary visas but then overstay them. Visa applicants from the affected countries are required to pay $5,000, $10,000 or $15,000 in bonds, which will be refunded if the traveler complies with the terms of the visa or if the visa application is denied.

As of early April, the number of World Cup fans affected by the bond requirement was believed to be relatively small, perhaps only about 250 people, according to U.S. officials who were not authorized to comment publicly and spoke on condition of anonymity. But they said that number was changing rapidly as more people buy tickets and some with tickets opt against traveling.

FIFA had requested the waiver, which had to be approved by the State Department and Department of Homeland Security, and was the topic of discussion at multiple meetings at the White House and elsewhere in Washington for several months, the officials said.

Kim and Lee write for the Associated Press.

The UK bond market is currently experiencing a period of intense volatility, with the yield on 30-year government bonds, known as gilts, climbing to its highest point since 1998.

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On Tuesday, 30-year gilt yields rose as much as 0.14% to 5.79%, their highest level this century, before dipping slightly to around 5.6% at the time of writing.

The yield on the 10-year gilt also climbed as much as 0.15% to 5.11%, very close to the 18-year high of 5.12% hit earlier in the Iran war. It has since lowered somewhat to roughly 4.93% on Thursday.

Bond prices and yields have an inverse relationship. Bond yields rise when prices fall in order to increase investment attractiveness as demand for the debt weakens.

The surge in gilt yields indicates that investors currently perceive UK debt as a riskier prospect than other lending options, requiring a larger premium to commit their capital over the long term.

Presently, there are several reasons for this evident but abnormal lack of confidence.

The primary catalyst is the fear that the Bank of England may be forced to keep interest rates higher for longer to mitigate the chance that inflation will remain “sticky” and not return to the 2% target as quickly as previously hoped.

This estimation has been fuelled by surging energy prices due to the disruption caused by the Iran war. Gilts have continuously sold off during the conflict.

Speaking to Euronews, Richard Carter, head of fixed interest research at Quilter Cheviot, added that “the UK is expected to be the worst hit developed economy by events in the Middle East due to its reliance on energy imports, so the longer energy prices remain elevated, the deeper the pain the country is likely to experience.”

Beyond geopolitics and global energy markets, there are many domestic factors currently contributing to the exceptional distrust in UK debt.

Keir Starmer, fiscal policy and local elections

Political uncertainty and fiscal policy are also playing a central role in the recent and severe gilts sell-off.

In 2024, after Keir Starmer’s election, the Labour party pledged “fiscal discipline” and established a long-term framework in the Autumn Budget to distinguish the new government’s approach from the former.

The plan introduced the “Stability Rule” mandating that the current budget, which covers day-to-day costs such as public sector salaries and welfare, must be in surplus by the end of 2029/30. This effectively prohibits borrowing to fund the ongoing operations of the British state.

Additionally, the “Investment Rule” was also put forward to target the national balance sheet. This norm requires Public Sector Net Financial Liabilities (PSNFL) to be falling as a percentage of GDP within the same timeframe as the “Stability Rule”.

By using PSNFL rather than the traditional measure of net debt, the UK Treasury has more room to borrow for long-term capital projects like infrastructure and green energy, which are technically classified as “investments” rather than “spending”.

Finally, the Budget Responsibility Act 2024established a “fiscal lock”, legally preventing any significant tax or spending changes from being introduced without an independent assessment from the Office for Budget Responsibility (OBR).

Despite all these rigid guardrails, bond markets are now sceptical because investors fear political necessity will eventually override fiscal prudence.

Recent scrutiny of Starmer has intensified as he faces a mounting challenge from the left of his party, where dissenting voices are calling for a shift away from “fiscal conservatism” to address funding crises in the NHS and local government.

On top of that, the disastrous appointment of Peter Mandelson as Britain’s ambassador to Washington, and the revelations of his past friendship with Jeffrey Epstein, have severely damaged Starmer’s administration over the last few months.

The problems have culminated in the local elections taking place in 136 authorities for more than 5,000 council seats on Thursday. More than half of the seats up for grabs this week are being defended by Starmer’s party.

Analysts project that Labour will suffer a massive loss and potentially end up over 1,000 councillors down. Any major setback will certainly increase internal pressure to oust Keir Starmer as the leader in which case snap elections could be triggered.

The head of markets at AJ Bell, Dan Coatsworth, explained to Euronews that “investors will be watching bond markets like a hawk over the coming days as the results of the UK local elections are released. Any major setback to Labour will fuel calls for Keir Starmer to be replaced as prime minister and if that happens, bond markets will want to know who is taking over.”

“The obvious challengers, Angela Rayner and Andy Burnham, are seen as candidates who might push for greater government borrowing and spending, which could take gilt yields even higher. Fundamentally, there is a real risk of gilt yields soaring if Labour experiences a wipeout in the local elections,” Coatsworth added.

Speaking to Euronews, the head of fixed interest research at Quilter Cheviot, Richard Carter, conveyed the same sentiment.

“The uncertain UK political backdrop has played a role ahead of the local elections with gilt investors concerned about a Labour Party lurch to the left should Keir Starmer either be replaced or have little choice but to appease his backbenchers in the wake of challenging results.”

Effectively, these local results are no longer just a measure of regional popularity, but a high-stakes verdict of political viability that could determine the long-term stability of British borrowing costs.

The cost to the UK Treasury, businesses and households

For the British government, the consequences of the ongoing bond market shift are measured in billions of pounds as the UK’s debt-interest bill is highly sensitive to fluctuations in gilt yields.

According to estimates from fiscal watchdogs, every 0.25% rise in government borrowing costs adds approximately £2.5 billion (€2.9bn) to the annual debt-servicing cost. A 0.5% increase, which has already been observed this spring, therefore requires the UK Treasury to find an extra £5 billion (€5.8bn) every year just to pay interest.

The rise in gilt yields also has a direct and immediate impact on the real economy as they serve as the benchmark for pricing a vast array of financial products, most notably fixed-rate mortgages.

As yields climb, lenders adjust their swap rates, which inevitably leads to higher monthly repayments for millions of homeowners looking to refinance.

Businesses also feel the squeeze. The cost of corporate loans and commercial credit is often tied to the yield curve. When the state has to pay more to borrow, the private sector follows suit, potentially stifling investment and slowing economic growth.

“A gilt yield shock might be called a stealth tax, but it is not an intentional one. It would be the knock-on effects of bond prices falling and yields going up, which can negatively affect asset prices and tighten financial conditions,” Coatsworth told Euronews.

“Consumers would experience higher mortgage costs and potentially spend less money, particularly if companies scale back hiring if their borrowing costs rise from higher gilt yields, as the two are intertwined. It could also lead to lower public spending and pave the way for tax rises,” Coatsworth added.

Every increase in the cost of debt limits the amount of capital available for private innovation and reduces the disposable income of households already struggling with the cost of living.

LONDON — The challenge for King Charles III as he arrives in the United States this week is, as always, to live up to his mother’s example.

The late Queen Elizabeth II wowed Congress in 1991 with a speech that celebrated the shared democratic traditions of Britain and the United States, quoted Abraham Lincoln, Franklin D. Roosevelt and Ralph Waldo Emerson, and highlighted the deep bonds between the two nations.

Those themes will also be at the top of Charles’ agenda as he celebrates America’s 250th birthday and seeks to calm tensions surrounding Prime Minister Keir Starmer’s refusal to support President Trump’s war against Iran, said Douglas Brinkley, a presidential historian at Rice University in Texas.

“We’ve got to always make the distinction that there’s a difference between the government of the U.K. and the kings and queens of Great Britain, who are really always coming to try to put [on] a good face,” Brinkley told the Associated Press. “Politics come and go; prime ministers, presidents, come and go; but there’s something deeper about the special relationship between the United States and the U.K.”

Charles and Queen Camilla begin a four-day trip on Monday, when they will have tea with the president and First Lady Melania Trump, then tour the White House beehive, in a nod to the king’s focus on the environment.

The formal arrival ceremony will take place Tuesday, with a 21-gun salute, brass bands playing the national anthems of both countries and a contingent of U.S. service members passing in review. The ceremonies will be followed by a meeting between Trump and Charles.

Behind the scenes

But beneath the pomp and pageantry will be a carefully choreographed diplomatic event staged, like all royal visits, at the request of the British government. Starmer resisted pressure to cancel it after Trump belittled the British military’s sacrifices in Afghanistan and criticized him personally for failing to back the U.S. in its war alongside Israel against Iran.

Despite those tensions, Trump has continued to speak warmly about Charles.

“History has shown that President Trump really tries to be impressive whenever he’s dealing with British royalty,” Brinkley said. “And I’m sure it’ll be the same this time around.”

Ever since 1939, when King George VI became the first British monarch to set foot on the soil of the country’s former colony, there’s been a special sort of excitement whenever the royals come to the United States.

Take that first visit, which took place as World War II loomed over Europe. The royals toured the East Coast and attended a picnic at President Roosevelt’s private home in Hyde Park, N.Y. “King tries hot dog and asks for more,’’ declared the New York Times.

But the big moment was when the royals traveled to Mount Vernon to lay a wreath at the tomb of George Washington. It showed respect at a time of isolationism.

“People could see the handwriting on the wall and know that it was going to be important for the United States and Britain to stay strong for fighting against Hitler,” said Barbara Perry, a presidential scholar at the University of Virginia’s Miller Center.

But bonding over sausages had broader benefits, helping the royals build links to the general public as well as its leadership. After war broke out in September 1939, Queen Elizabeth, the wife of George VI and mother of the future Elizabeth II, wrote to First Lady Eleanor Roosevelt to say how moved she’d been by letters from Americans who enclosed small sums for British forces.

“Sometimes, during the last terrible months, we have felt rather lonely in our fight against evil things, but I can honestly say that our hearts have been lightened by the knowledge that friends in America understand what we are fighting for,’’ she wrote.

The queen’s connection

Queen Elizabeth II built on those relationships, making four state visits to the U.S. during her 70-year reign. She joined President Ford in celebrating America’s bicentennial in 1976 and met with President George W. Bush in 2007 as British and American forces fought in Iraq and Afghanistan.

Smoothing turbulent waters and reminding both sides about their common bonds were what those trips were all about.

Charles’ visit will be no different. It includes a commemoration of the Sept. 11, 2001, attacks, a ceremony honoring fallen service members and an event to be attended by Queen Camilla to mark the 100th anniversary of Winnie the Pooh stories by British author A.A. Milne.

Certain events will be avoided.

The royals won’t meet with Jeffrey Epstein’s victims, despite calls for the king to address his accusations related to his brother Andrew’s links to the convicted sex offender. Nor are there plans for Charles to meet with his son Prince Harry, who has been a critic of the monarchy since giving up royal duties and moving to California.

Those issues aren’t the priority, said Robert Hardman, author of “Elizabeth II: In Private. In Public. The Inside Story.”

“He’s going because 250 years ago the Founding Fathers of the USA kicked out his great-times-five grandfather, and he’s going to say, `No hard feelings, it’s been a great divorce, we’ve had a lovely 250 years and let’s reflect on the high points,’’’ Hardman said. “I mean, there are going to be some very, very large elephants in the room during that visit … but, you know, there are plenty of other things for the king to focus on.”

History, not politics

Charles’ speech to a joint session of Congress offers the chance to deliver the message that long-term friendship is more important than transient disputes.

He is also likely to offer a bit of humor, as his mother did when she addressed lawmakers in 1991.

Wearing soft peach amid a sea of gray suits, the diminutive monarch began her remarks with a joke about an earlier blunder at the White House when her lectern was so tall it obscured the audience’s view of her.

“I do hope you can see me today from where you are,’’ she deadpanned.

The chamber erupted in laughter. A standing ovation followed. Then she launched into a speech about democratic values, the rule of law and the Atlantic Alliance — the foundation of NATO.

Those are values that critics of the current U.S. administration say it has retreated from in recent years. But Charles will offer his own take on those ideas, Brinkley said.

“The theme of the speech is going to be American exceptionalism, American history, the importance of U.S.-British alliance, and some memories from the past,” he said. “But also about the love affair the two countries share with each other, even though it goes over rocky rapids from time to time.”

Kirka writes for the Associated Press.

Norway is preparing to lift restrictions preventing its $2.2 trillion sovereign wealth fund from investing in government bonds issued by Syria.

The move follows the political transition after the ousting of Bashar al-Assad and the rise of Ahmed al-Sharaa, whose government has been seeking economic recovery and international reintegration after more than a decade of war and sanctions.

At the same time, Norway plans to newly restrict investments in bonds issued by Iran, aligning with ongoing international sanctions.

Policy Shift and Financial Context

The Norwegian sovereign wealth fund, the largest in the world, plays a major role in global financial markets. Its investment decisions often influence broader investor behaviour.

The updated policy removes Syria from the exclusion list for government bonds while adding Iran, reflecting changing geopolitical and sanctions dynamics.

Although the fund does not currently hold investments in Middle Eastern government bonds, the policy shift opens the door for future allocations and signals a reassessment of risk and legitimacy.

Geopolitical Significance

Norway’s decision represents a notable step toward Syria’s re-entry into the global financial system. It comes alongside other developments, including the restoration of Syria’s financial links with international institutions after years of isolation.

The move also highlights a divergence in how states are being treated: while Syria is gradually being reintegrated, Iran remains economically isolated due to continued tensions and sanctions.

As one of the world’s most influential sovereign investors, Norway’s stance could encourage other countries and institutions to reconsider their own restrictions on Syria.

Analysis

The decision reflects a broader recalibration of international economic engagement based on political change and shifting strategic priorities. By opening the possibility of investment in Syrian bonds, Norway is signalling cautious confidence in the new government’s direction and stability.

At the same time, the move remains largely symbolic in the short term. The wealth fund has no immediate exposure to Syrian debt, and actual investment will depend on risk assessments, market conditions, and institutional safeguards.

More importantly, the policy underscores how financial tools are increasingly used as instruments of foreign policy. Inclusion or exclusion from global capital markets can legitimise governments, incentivise reforms, or reinforce isolation.

In Syria’s case, gradual financial reintegration could support reconstruction and economic recovery, but it also raises questions about governance, transparency, and long-term stability after years of conflict.

With information from Reuters.