Neha Khoda

Global Rates & FX Views: Global bond selloff & credit impact

Sphia Salim, Ralf Preusser, Meghan Swiber, Neha Khoda, Barnaby Martin, Zviya Salim, Megan Zweiber

A repricing of central bank expectations and shifting term premium dynamics drove a global bond sell-off through late August, prompting investors to increasingly attribute long-end rate movements to improving growth rather than hyperscaler supply. While credit markets currently trade at historically tight spreads despite recent widening driven by rate volatility, a structural divergence has emerged in Europe where corporate bonds increasingly yield less than sovereign debt. Analysts forecast that stabilizing long-end rates will require fiscal consolidation, with the market's future direction hinging on whether an anticipated AI-driven profit surge can materialize to support higher valuations.