Bond yields are surging worldwide — and France is on the 'ugly side': Chart of the Day

It's not just the US seeing a rapid rise in bond yields . The surge in Treasury yields worldwide is raising alarm bells among investors.

"Any lingering doubts about whether the world has truly left the era of low interest rates behind should now be quashed," Thomas Garretson, senior portfolio strategist at RBC Wealth Management, wrote in a recent note.

Longer-dated bond yields have been flagging issues "that have been percolating in global bond markets for years, which are now coming to a head," he noted.

Wall Street strategists see an array of reasons behind the rise in yields.

"On the good side of the spectrum, better-than-expected economic growth has driven US bond yields up to levels that are back to normal," Ed Yardeni of Yardeni Research wrote last week.

"On the ugly side, soaring bond yields in France are signaling a looming debt crisis ," he said.

The protests over public education funding across major French cities have coincided with surging bond yields.

Macquarie strategists have argued that there is a "direct and self-reinforcing causal connection" between recent street riots over proposed budget cuts in France and the country's bond market stress.

Behind France, the US 10-year yield ( ^TNX ) has posted its biggest jump among more than 20 countries tracked by Yardeni Research.

Italy, Indonesia, Japan, and South Korea have also seen their benchmark yields rise at least 100 basis points since the start of the year.

Rising yields are also attributed to higher oil prices stemming from the war in the Middle East and the unwinding of the yen-carry trade.

Japanese investors, who accumulated over $1.3 trillion in US Treasurys during the era of negative domestic rates, have been repatriating capital as domestic yields normalize.

RBC research estimates that every $100 billion shift in Japanese holdings impacts 10-year Treasury yields by roughly 50 basis points. As of July 2026, Japan's holdings are down $120 billion so far this year and about $300 billion from their 2021 peak.

As the US 10-year Treasury yield hangs near its highest level in 24 years, strategists are seeing a risk of 6% for the first time since 2000.

Even as bond yields revert to their levels prior to the 2008 financial crisis, strong earnings reports, coupled with a pause in interest rate hikes from the Fed , are expected to keep the stock market rally intact headed into the end of the year.

Seasonal tailwinds during midterm election years also favor a positive return for the S&P 500 this quarter.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.