The statement that the yield of US Treasuries is at 5.15% is currently (May 2025) not consistent with available market data. The yield for 10-year US Treasuries is currently around 4.5%. Nevertheless, the fundamental significance of a rising or high yield on US government bonds is of great relevance for investors in German-speaking countries.
Importance of High US Treasury Yields
Global Interest Conditions and Capital Flows
- Capital Outflows from Europe: Higher yields in the US make American government bonds more attractive to international investors. This can lead to capital outflows from European markets as investors shift their money to higher-yielding US investments.
- Exchange Rate Development: Traditionally, a rising Treasury yield leads to an appreciation of the US dollar against the euro and other currencies. However, it has recently been observed that this correlation can be temporarily disrupted – for instance, when there are uncertainties about the credibility of the dollar or political risks exist.
- Financing Conditions: Higher interest rates in the US also affect global financing conditions. Companies and states worldwide have to pay higher interest rates when they refinance on the international capital market.
Impact on German/European Investors
- Yield Differential: The difference between German government bonds (currently about 2.8%) and US Treasuries (about 4.5%) is significant. This makes American government bonds attractive for German investors – however, they are subject to exchange rate risks.
- Portfolio Allocation: Many institutional investors in the German-speaking area invest a part of their portfolios in foreign government bonds for diversification and to take advantage of higher yields.
- Volatility in the Bond Market: Rising Treasury yields are often associated with increased volatility. This also indirectly affects European bond markets through global market movements.
Current Market Situation
| Instrument | Current/Expected Yield |
|---|---|
| 10-Year Bund | Approx. 2.8% |
| 10-Year US Treasury | Approx. 4.5% |
Forecasts assume that this level will remain stable until the end of the year or fluctuate slightly.
Conclusion
Even if the current Treasury yield is not exactly at 5.15%, but rather around 4.5% (as of May/June 2025), the fundamental argument remains: A high or rising yield on US government bonds massively influences the global financial markets – including the markets in the German-speaking area – through changing capital flows and exchange rates as well as through tightened financing conditions worldwide. For German investors, this means both opportunities (higher returns) and risks (exchange rate fluctuations), which is why careful analysis of their portfolio composition is advisable.