--- title: "Don't Short the Bond Rout, Expert Sees a Better Trade" type: "News" locale: "en" url: "https://longbridge.com/en/news/297792685.md" description: "Global bond yields are surging to multi-year highs across the U.S., U.K., and Japan. Experts attribute this not to temporary geopolitical shocks but to a structural sell-off since 2022 driven by sticky inflation, heavy debt supply, and hawkish central bank policies. Robin Brooks advises against shorting government bonds due to potential interventions, suggesting instead strategies like shorting the dollar, going long safe-haven currencies, and accumulating precious metals." datetime: "2026-09-02T13:02:27.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/297792685.md) - [en](https://longbridge.com/en/news/297792685.md) - [zh-HK](https://longbridge.com/zh-HK/news/297792685.md) generator: "portal-rs" --- # Don't Short the Bond Rout, Expert Sees a Better Trade Global benchmark bond yields are surging, and seemingly no country is spared. Japan’s 10-year government bond yield hit 3% for the first time since 1996 on Tuesday, the U.K.’s 10-year gilts hit 5.27% – the highest since 2008, and 10-year U.S. Treasuries briefly touched 4.8%. Headlines connect the move to the Middle East escalation and fiscal friction, but for **Robin** **Brooks**, former chief FX strategist at **Goldman Sachs**, the escalation is just part of a multi-year trend. “That’s creating the mistaken impression that what’s going on is new,” Brooks wrote. “Neither is true. This sell-off has been going on in fits and starts since 2022 and — with the exception of low-debt safe havens like Switzerland or Sweden — it’s engulfed pretty much every advanced economy.” ## Oil, Sticky Inflation and Heavy Supply Renewed U.S.-Israeli military action against Iran pushed Brent crude above $94 a barrel, reviving inflation fears ahead of the heating season. “A decline in inventory and seasonal demand for fuel going into winter in the northern hemisphere means the direct impact on headline inflation around the world is to the upside,” Tai Hui, APAC Chief Market Strategist at **J.P. Morgan Asset Management Hong Kong**, said, according to Reuters. Hawkish central bank guidance has compounded the pressure. Fed Chair **Kevin Warsh** warned at Jackson Hole that the central bank would have “work to do” if price pressures persist, and the ECB is expected to hike next week. “I think the Fed hikes in September, and I think it’s the beginning of the three-rate hike cycle at minimum,” said Andrew Lilley, Chief Rates Strategist at **Barrenjoey**. Meanwhile, tech hyperscalers are flooding markets with debt to fund AI buildouts. “Investors are increasingly demanding greater compensation to own duration as sovereign issuance and corporate funding needs compete for the same pool of capital,” **State Street’s** Senior Fixed Income Strategist Masahiko Loo noted. A notable part of the global uncertainty stems from Japan, which anchored global fixed income for decades. Rather than panicked repatriation, Loo sees a slower structural shift. “The story is not large-scale repatriation, but Japan gradually ceasing to be the marginal buyer of foreign bonds… This is why the sell-off feels more like a buyers’ strike than a sellers’ panic,” he explained. ## The Five-Year Slow Burn Brooks has been tracking the bond move in three phases. In 2022–2023, rate hikes lifted entire curves. In 2024, “2-year yield started falling in most places, but long-term yields kept rising” as term premia expanded. Now, front-end hawkishness is colliding with post-COVID balance sheets that have “gotten unmoored on a global level.” Curiously, “inflation break-evens are fast asleep everywhere,” meaning the move is driven by real yields — even as debt piles point toward eventual monetization. Interventions from the European Central Bank, Bank of Japan’s purchases and Treasury buybacks amount to “artificial yield caps,” leaving the “shadow yield” well above observed levels. “This sell-off therefore has many years to go,” Brooks wrote, while cautioning against thinking that it’s an easy trade. “Shorting government bonds isn’t a no-brainer,” he said, explaining that the governments will keep intervening to prevent a cataclysm. Instead, strain vents through currencies — “the crazy fall in the Yen over the past two years testifies to that.” His playbook is to short the dollar, go long the Swedish krona alongside Swiss assets, and accumulate precious metals as the debasement trade. *Image via Shutterstock* **Read Also: Top Economist Says Trump Has Awakened the 'Bond Vigilantes' With Tariffs and Iran War as 10-Year Treasury Yield Surges to 19-Month High** ### Related Stocks - [UDN.US](https://longbridge.com/en/quote/UDN.US.md) - [GLDM.US](https://longbridge.com/en/quote/GLDM.US.md) - [GOLD.AU](https://longbridge.com/en/quote/GOLD.AU.md) - [GLD.US](https://longbridge.com/en/quote/GLD.US.md) - [PPLT.US](https://longbridge.com/en/quote/PPLT.US.md) - [SIVR.US](https://longbridge.com/en/quote/SIVR.US.md) - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [IAU.US](https://longbridge.com/en/quote/IAU.US.md) - [ZSL.US](https://longbridge.com/en/quote/ZSL.US.md) - [UGL.US](https://longbridge.com/en/quote/UGL.US.md) - [SLV.US](https://longbridge.com/en/quote/SLV.US.md) - [PALL.US](https://longbridge.com/en/quote/PALL.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [GLDW.US](https://longbridge.com/en/quote/GLDW.US.md) - [FXE.US](https://longbridge.com/en/quote/FXE.US.md) - [PSLV.US](https://longbridge.com/en/quote/PSLV.US.md) - [SGOL.US](https://longbridge.com/en/quote/SGOL.US.md) - [AGQ.US](https://longbridge.com/en/quote/AGQ.US.md) - [SLVR.UK](https://longbridge.com/en/quote/SLVR.UK.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [STT.US](https://longbridge.com/en/quote/STT.US.md) - [W4VR.SG](https://longbridge.com/en/quote/W4VR.SG.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [SPIN.US](https://longbridge.com/en/quote/SPIN.US.md) ## Related News & Research - [PRECIOUS-Gold falls as dollar, yields rise ahead of inflation data](https://longbridge.com/en/news/298588978.md) - [PRECIOUS-Gold climbs on dip buying, Fed hike bets rise after US inflation data](https://longbridge.com/en/news/298740530.md) - [PRECIOUS-Gold rises as dollar eases; US inflation data on radar](https://longbridge.com/en/news/298242637.md) - [PRECIOUS-Gold little changed as markets await key US inflation data](https://longbridge.com/en/news/298146831.md) - [Silver Holds Decline on Fed Rate Hike Bets](https://longbridge.com/en/news/298146497.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**