Long-term yields reached their highest level in four months.

European and Japanese government bonds are looking more attractive than U.S. debt for investors in those countries, where yields are up and the policy outlook appears more stable.

The relentless rise in government bond yields in the United States and around the world may represent the “new normal” for both investors and companies.

"There's a strong argument for a half percent" interest rate cut when the Federal Reserve meets in mid-September. "It's going to be hotly debated."

Even as relative calm has returned in recent days, the likelihood of further shakeouts in currencies and equities, and simmering economic risks, support the case for bonds.

Investors are focused primarily on the Fed, currently pricing in at least two quarter-point interest rate cuts before the end of the year.

"Investors still have faith that the dollar itself, regardless of the state of the actual government, will continue to be the global currency of choice and keep value in a fraught political situation."

Though the how, why, and when remain murky, bond traders expect currently inverted Treasury yield curves to soon normalize.