Commerzbank: Global Bond Market’s Bear Steepening Faces Momentum Test, New Highs in Long-Term Yields Signal Possible Turning Point

Commerzbank interest rate strategist Hauke Siemsen pointed out in his latest report that after the long-end yields of German government bonds, eurozone member state bonds, UK gilts, and Japanese government bonds have successively reached new highs, the global bond market's bear steepening trend will face a key test. The strategist believes that multiple pieces of evidence indicate that the selling momentum of long-term government bonds may be exhausted.

"More and more investors are telling us that the current level of real yields is already attractive," Siemsen said. "More importantly, but often overlooked, is that risk appetite continues to contract against the backdrop of a pressured stock market." He specifically mentioned: the yield on France's 30-year government bond (OAT) has stabilized at the key level of 4.50%; the yield on Germany's 10-year government bond has found technical support below 2.80%; and Italy's 30-year government bond (BTP) received higher-than-expected demand in Tuesday's syndicated issuance. These signs suggest that although the yield curve still shows a bear steepening pattern, the marginal demand for long-term bonds is improving.