Tradeweb Government Bond Update – December 2025
Global 10-year government bond yields moved higher in December, extending November’s upward trend across most major markets, with several countries registering notable multi-year highs, including Austria, France and Japan.
Japan’s 10-year government bond yield rose sharply during the month, increasing by nearly 27 basis points to close December at 2.07%. During the month, yields reached an intramonth high of 2.1%, marking the highest level seen in the last 17 years. On December 19, the Bank of Japan voted unanimously to raise interest rates to 0.75%, the highest level since 1995. Meanwhile, the country’s annual inflation rate fell slightly to 2.9% in November from October’s three-month high of 3%, the highest reading since July 2025.
Taichi Shibuya, Head of Japan at Tradeweb, said: “Japanese government bond yields pushed decisively higher in December, with the 10-year yield breaking above 2% for the first time in many years. The move highlights how investor expectations around the Bank of Japan’s policy direction continue to evolve, particularly as inflation remains elevated and global rate pressures persist. Liquidity conditions remained robust, even as markets adjusted to this new yield environment.”
Elsewhere in the Asia Pacific region, the Australian 10-year bond yield recorded its largest monthly move for the year, climbing more than 23 basis points to 4.75%. The increase came amid ongoing concerns that inflation remains above target, reinforcing expectations that policy rates may stay higher for longer. On December 9, the Reserve Bank of Australia decided to leave the cash rate unchanged at 3.6%, citing that “while inflation has fallen substantially since its peak in 2022, it has picked up more recently”.
In the United States, the yield on the 10-year Treasury note edged higher by 13 basis points over the course of December, ending the month at 4.15%. On December 10, the Federal Reserve announced its third rate cut this year to a range between 3.5% and 3.75%. However, the move featured “no” votes from three members, which hasn’t happened since September 2019. The annual inflation rate in the U.S. came in at 2.7% in November, the lowest since July, and below market forecasts of 3.1%.
Across Europe, government bond yields also moved higher. The UK 10-year Gilt yield rose more modestly by three basis points during the month, ending December at 4.48%, as investors weighed softer growth indicators against still-elevated inflation. The country’s annual inflation rate slowed to 3.2% in November, the lowest level in eight months, compared to 3.6% in October, while the S&P Global UK Manufacturing PMI reached a 15-month high of 50.6 in December, up from 50.2 in November.
The European Central Bank announced on December 18 that it would hold the three key interest rates steady. In Germany, the 10-year Bund yield increased into year-end, reflecting a broader repricing of rate expectations across the Euro area. In December, the country’s annual inflation rate was once again recorded at 2.3% according to preliminary estimates, while the HCOB Germany Manufacturing PMI fell to 47 from 48.2 in the previous month.
In France, political uncertainty remained a key theme, continuing to influence market sentiment. The French 10-year government bond yield reached a three-year yield high of 3.63% on December 12, before ending the month at 3.56%. Similar to its German counterpart, France’s annual rate was projected to stay at 0.9% in December.
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