Global effects yields have hit new highlights, yet the markets remain calm; all eyes on us fed

The long-term global returns are on a sustained upward trend, with several yields of the 30-year-old 30 years that have become new highlights for the 21st century over the past week. The UK is currently leading at 5.5%, followed by the US at 4.7%, France at 4.3%, Germany with 3.3%and Japan at 3.2%. As a result, the spread between the developed and emerging markets has narrowed long -term returns. For example, India’s 30-year government bond yield has remained at 7.2%, and the distribution has dropped drastically from 390 bps to 175 bps over the past 3 years. The future concern is that this persistent increase in the effects of developed countries may have a negative bias on the global market. Generally, high interest rates are negative for stocks. Profitable long -term global bond yields will even affect mortgage capital flow to emerging markets such as India, making them more attractive with a low country risk. Secondly, it will put countries like India under pressure to maintain their long -term interest rates at a high rate to attract foreign inflow. The European bond yields are expected to remain alive due to the rising fiscal spending plans of NATO countries. Defense expenditure will increase significantly as the US pushes its allies to bear a larger part of the cost. With the US historically contributing almost two -thirds of NATO’s defense budget, it is now trying to reduce its unbelieving share in the future. In addition to the defense spending, there are also concerns about inflation, the slowdown of economic growth, the increasing debt, fiscal tensions and lately, the prospects also weigh. The effects of Fed & Bond Market on the monetary side, the US Fed, which is an important governing body to determine the rate of the global interest rate, held the rates at 4.5% due to Hawkish policy. The Fed is concerned about high core inflation, a strong job market and the tariff policy implications on the CPI. Recently, market expectations have moved, with investors expecting possible cuts to the rate to weaker work data. The immediate effect is expected in short -term papers, which respond more to changes in interest rates. As an arbitrage event, traders would therefore buy short term and sell long-term papers. This has increased the demand for shorter expiry dates as their net current value improves in a falling rate cycle. As a result, the recent increase in long-term returns seems to be driven more by arbitrage activity than by structural factors. We can expect the long-term yield to fall in the medium term, as the Fed will lower further rate during 2025-2026; Otherwise, this may be a challenge. The other thing is that the bond yields in the US were great due to quantitative tightening, reducing the demand for bonds, especially for long-term-dated effects. Therefore, not only the rate cuts, but also the Fed, will have to reversal its tightening policy on neutral and relief to improve the financial assets in the banking system. A growing concern is the impact of sharp tariff increases that Trump has announced over the past five months, which have urged our stores to raise product prices. CPI, which was concentrated during the year, began to rise to 3.1% core VPI in August. The Fed now has a delicate balance between managing rising inflation and a weakened labor market. A delay in the rate of rate reduction will keep the total interest rate in the system on the higher side, affecting the performance of global equity in short to medium term. Currently, the market is adopting it positively, given a long -term change in Fed’s monetary policy. (The author is head of research, Geojit Investments) Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or brokerage firms, not coin. We advise investors to consult with certified experts before making investment decisions, as market conditions can change quickly and conditions can vary.