The sell-off in bond yields is being led by the U.S. but not restricted to it.

The old adage that the rest of the world sneezes when the U.S. catches a cold very much applies to bonds as well.

The 30-year Japanese bond yield BX:TMBMKJP-30Y just rose to the highest in history as the 10-year U.K. gilt yield BX:TMBMKGB-10Y rose to the highest since June 2008. German 10-year bund yields BX:TMBMKDE-10Y recently hit the highest since 2011.

That come as the 10-year Treasury yield BX:TMUBMUSD10Y reached the highest level of the second Trump administration.

Yields move in the opposite direction to prices.

Moyeen Islam, a Barclays fixed-income strategist, last week calculated the tight correlation between U.S. and U.K. 30-year yields since 2023. For every 1% move in U.S. long-term rates, U.K. rates move by about 0.67%.

Some of that correlation is that the same factors, like the Iranian conflict and the artificial-intelligence build-out, are impacting multiple economies. But part of the close correlation is simply a factor of market sentiment.

"Markets are increasingly pricing a world of persistent fiscal pressures and elevated sovereign term premia, but not necessarily unique U.S. fiscal challenge," said Bank of America strategists led by Oliver Levingston in a recent note.

Major markets may be taking their signal from U.S. bonds, but credibility gaps in Europe are exacerbating the moves, they added.

Japanese yields, meanwhile, moved higher as U.S. Treasury Secretary Scott Bessent said it was his belief that the Japanese government and the Bank of Japan will do things that lead to a stronger yen.

The broadcaster NHK reported that Bessent told Japanese officials that the Bank of Japan should lift interest rates.

-Steve Goldstein