There are worrying rumblings in the bond markets, alarming investors and creating headaches for finance ministers, including the UK’s Rachel Reeves. The yields, or interest rates, on sovereign debt from the US, the UK and some eurozone countries has been rising in recent weeks, as bond prices have fallen. Earlier this week, the yield on US 30-year Treasuries rose to its highest level in more than a year, and yesterday the yield on 10-year Treasuries climbed six basis points to 4.69% – spooking Wall Street and prompting stocks to slide. US Treasuries have been weakening as traders lose faith that central banks will cut interest rates as quickly as hoped. Strong data showing a surprise jump in job vacancies at US companies, and rising price pressures in the services sector, added to those worries on Tuesday. UK debt has also fallen out of favour with investors, on fears that economic growth will be weaker than expected. This has pushed up Britain’s borrowing costs, with the yield on 30-year UK gilts hitting 5.242% on Tuesday, the highest in 27 years, and above the peak reached after Liz Truss’s mini-budget in 2022 sparked turmoil in financial markets. That eats into Reeves’s fiscal headroom and could force the chancellor to make fresh cuts to public spending to avoid breaking her own fiscal rules.It also fuelled expectations that the UK could need more tax raises to finance its debt. Anxiety that Donald Trump could trigger a trade war once he is reinstalled as the US president has hit the Chinese currency today. The yuan dipped to 7.3316 to the US dollar in trading today, its weakest level since September 2023, and below the daily "fix" set by Beijing, which dictates the levels where the yuan can trade. The currency came under pressure after Trump denied a newspaper report that said his aides were exploring tariff plans that would only cover critical imports. Germany’s struggling economy has suffered another blow, with data this morning showing a drop in manufacturing orders. German factory orders tumbled by 5.4% month on month in November, the statistics body Destatis reported, and were 1.7% lower than a year ago. The fall suggests Germany’s economy may slide into “a light winter recession”, says Carsten Brzeski, the global head of macro at ING. The agenda • 10am GMT: Lords financial services regulation committee hearing with Bank of England’s Sam Woods • 10am GMT: eurozone consumer and economic confidence data for December • 1.15pm BST: US ADP private payroll data, plus jobless claims at 1.30pm • 1.30pm BST: US weekly jobless claims • 7pm BST: Federal Reserve releases the minutes of its latest FOMC meeting We'll be tracking all the main events throughout the day …
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