- Sovereign bond yields in major advanced economies have surged since the onset of the war in Ukraine.
- U.S. Treasury yields remain near 4%, driven by mounting concerns over debt sustainability, in a context of weakening governance standards, persistent political polarization, prolonged legislative gridlock, and questions about the Federal Reserve’s independence. There is also growing apprehension about the growth and inflation implications of the Trump administration’s economic policies. Looking ahead to 2026, these U.S. policy effects are expected to intensify, likely fueling greater financial market volatility and supporting a stronger euro against the U.S. dollar.
- In Europe, France remains one of the bloc’s most fiscally fragile economies, with a political crisis pushing French bond yields above Italy’s. Other indebted countries, like Spain, also face risks—but for now, its bond yields remain close to those of the EU’s Next Generation issues. German yields stay elevated relative to 2024 amid plans for fiscal expansion.
- Meanwhile, the rally in stock markets, gold, and Bitcoin in 2025 is powered by common underlying forces: liquidity, optimism, the current wave of technological investment & AI revolution, and macroeconomic & geopolitical uncertainty.
- A debate is emerging not only on whether some assets are entering bubble territory, but also on the extent to which the evolution of financial markets truly reflects the conditions of the real economy.
Senior Analyst I Economic analysis and International affairs
Analyst I Economic analysis and International affairs
