Long-term sovereign debt yields have been rising in a synchronized manner across major developed economies, with the United States, Japan, and several European countries recording levels not seen in decades. In the United States, the 30-year Treasury yield touched 5.3% in early September, while US public debt exceeded 40 trillion dollars for the first time. In Japan, the 10-year bond surpassed the 3% threshold for the first time in three decades. In Europe, the German 10-year Bund exceeded 3.36%, the highest level since 2011, and in France the 10-year yield rose to highs not seen since 2008. In Portugal, the 10-year yield closed above 3.7%, the highest value since October 2023.
Despite the escalation, economists consulted by Jornal Económico consider it unlikely that the trend will lead to a crisis. João Moreira Rato, former president of IGCP, points to concerns about fiscal policy sustainability and growing demand for financing for technological infrastructure associated with Artificial Intelligence. Cristina Casalinho, also former president of IGCP, argues that corporate fundamentals remain solid in both Europe and the United States, with very strong earnings generation capacity. The economist also highlights the stability of credit spreads, indicating there is no degradation of overall credit quality in the economy.
João Duque, full professor at ISEG, considers that the most relevant effect of the yield rise falls on companies: with higher cost of money, investment opportunities are reduced. The economist notes that the debt-to-GDP ratio has been declining and that only a marginal fraction of Portuguese debt stock is renewed each year, estimating that an increase from 2.25% to 3.5% in the average cost would represent an additional cost of approximately 225 million euros per year, a value he classifies as manageable.
Cristina Casalinho expects at least one more rate hike in Europe by year-end, although she considers that the ongoing rise in long-term rates reduces the urgency of further hikes by central banks. Inflation in the Eurozone accelerated to 3.3% in August, the highest value since 2023, fueled by rising energy prices associated with the conflict in the Middle East. An analysis by Bank of America cited in the Spanish press estimates that a significant portion of the rise in European long-term rates has direct origins in the United States, with the German 30-year Bund incorporating approximately 25 basis points imported from the US debt term premium.
