Investing.com - Global fixed-income markets suffered a second consecutive week of losses, as verbal intervention from Washington failed to tame deep-seated investor anxiety over expanding fiscal deficits, hawkish central bank trajectories, and sticky energy inflation.

Attempts by U.S. Treasury Secretary Scott Bessent to calm global debt desks provided only temporary relief.

Bessent jawboned the sovereign market by asserting that yields do not reflect underlying fundamentals and suggesting the government could expand its buyback operations beyond the newly announced $4 billion per issue ceiling.

Despite Bessent’s rhetoric and the Treasury’s formal decision to double its long-end liquidity support, global traders continued to sell sovereign paper.

The market’s skepticism underscores a growing conviction that government repurchases are merely technical backstops that cannot permanently offset structural supply overreach or persistent cost-push inflation.

European yields notch second consecutive week of gains

European debt hubs led the weekly selloff, driven by sticky regional inflation and primary supply indigestion that pushed borrowing costs across the continent to multi-year milestones.

Germany 10-year bund yield advanced to 3.254% on Friday, locking in a second consecutive weekly gain and remaining anchored near its highest level since May 2011 (a 15-year peak)

Germany 2-year schatz yield gained to 2.841%, also completing a second weekly advance as money markets priced in higher odds of a September rate increase by the European Central Bank.

France 10-year OAT yield jumped for a second straight week, settling near 4.10% following a heavy slate of government debt reopenings that tested institutional demand.

The yield advances across continental bourses reflect a bear-flattening posture, as traders brace for Eurozone inflation to remain elevated above the ECB’s 2% target amid ongoing Persian Gulf transit friction.

U.S. rates pivot back toward multi-decade peaks

Across the Atlantic, U.S. Treasuries mirrored the European selloff, erasing most of the tactical gains triggered by the Treasury’s initial buyback announcement.

The benchmark 10-year Treasury yield climbed back toward 4.70%, while the ultra-long 30-year yield hovered near 5.25% - reapproaching its 19-year high of 5.337% set earlier in the week.

The push higher came as primary dealer balance sheets remained strained by an unyielding schedule of federal bond sales, compounded by corporate debt issuance from technology firms funding artificial intelligence infrastructure.

Investor nervousness was further amplified after official data confirmed that total U.S. gross national debt surpassed the $40 trillion mark for the first time in history.

While Bessent dismissed the milestone, stating there is "nothing magic" about the figure and arguing the country can grow its way out of the deficit, bondholders continue to demand a higher structural term premium to absorb the burgeoning debt load.

Geopolitical energy friction keeps term premium elevated

Underpinning the multi-week selloff across global rate curves is the ongoing transit paralysis in the Middle East.

With Brent crude holding near $93 a barrel following threats of historic economic sanctions against Tehran from U.S. President Donald Trump, commercial tanker traffic through the Strait of Hormuz remains severely depressed.

With physical energy flows constrained and G10 fiscal borrowing expanding unabated, sovereign debt desks enter the weekend with a distinctly defensive posture. Global traders now pivot to Jackson Hole for guidance on whether central bank leadership will tolerate elevated long-term borrowing costs or take steps to adjust monetary policy.