Germany issued new benchmark 10-year bond at the highest yield in at least a year Wednesday as global investors continue to focus on fixed income markets for signals that the equity market rally could stall. 

Germany's Treasury sold €4 billion ($4.2 billion) in new 10-year bunds, set to mature in February 2027, at a yield-to-maturity of 0.36%, more than 10 basis points higher than the currency benchmark, which traded at 0.265% in European dealing and was auctioned at 0.21% on Nov. 23. 

By contrast, Portugal is reported to be seeking bidders for a benchmark 2027 bond that will yield around 4.3%.

The auction was followed by an announcement that the German government had filed a $5 billion debt shelf with the U.S. Securities and Exchange Commission, increasing its previous filing by $1.2 billion.€

The rising costs, while significantly lower than all other members of the single currency area, not only suggest that accelerating inflation could lift borrowing costs for Europe's biggest economy but also provide further signals that global fixed income markets are starting to shift in advance of central bank policy changes to the so-called "Trump rally" in equities.

Wall Street's "Bond King", DoubleLine Capital CEO Jeffrey Gundlach, warned Tuesday that U.S. stocks would be in "trouble" if 10-year bond yields were to rise past 3% and urged investors to "peel off" equity exposure.

His views echo -- but don't mimic -- those of Bill Gross of Janus Capital, who said yesterday that a 2.6% 10-year yield threshold would signal the start of a long-term bear market in bonds.

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