The monthslong rout in global government bonds is getting messier and weirder.

For weeks, the bonds of most developed economies have moved broadly in tandem, but not Thursday. A flight to bonds considered safe drove U.S. Treasury yields lower, while those of French, Italian and Greek bonds jumped in a sudden divergence helped by the unwinding of popular hedge-fund trades centered on Europe, according to fixed-income analyst and traders.

The moves represented a reprieve of sorts for the U.S., a day after the yield on the 10-year Treasury note had reached its highest level in more than 24 years, promising steeper borrowing costs across the economy.

But it was also a reminder of how extended selloffs in bonds can cause unexpected problems.

"Markets have a faint smell of a crisis in the making," said Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle.

Thursday's action exposed the complicated nature of this year's bond selloff. Yields across the developed world have been propelled higher since March on concerns that rising energy prices spurred by the Iran conflict will force central banks to take aggressive action to contain inflation.

A recent run of strong U.S. economic data has added to the global pressure, suggesting that U.S. rates might have to rise much higher to do anything to cool the economy.

Still, the selloff has also had its idiosyncratic elements, with yields often rising especially sharply in countries-including France, the U.K. and Japan-where investors are on edge over government debt loads and unsettled political situations.

Investors say the latest selloff in Europe began as a ripple from the U.S.: Treasury yields were pushed higher a day earlier by data showing the U.S. economy grew much faster than expected in the second quarter, even as inflation was cooler than anticipated.

The problem with the global rise in rates, investors say, is that European countries are now facing surging interest rates without the same level of economic strength to absorb it that the U.S. enjoys.

"You have the U.S. economy in overheating mode, which is a good thing, but too much of a good thing, maybe," said Benoit Anne, senior managing director at MFS Investment Management. "Obviously there's a contagion from the U.S....people are looking at weakest links."

The selling intensified and turned chaotic in Thursday's trading session, with bond markets in France, Greece and Italy swinging between gains and losses. France's 10-year bond swung as much as 0.16 percentage point intraday, twice its daily average.

The French government on Thursday pledged to cut spending by about $50 billion next year and bring its deficit down to 5%. But investors are skeptical of the plan, with Emmanuel Macron's government facing a divided parliament and a looming election.

"I would have thought a budget that does imply an effort of consolidation would get a more positive reaction, but markets skipped forward," said Benjamin Schroeder, an interest-rate strategist at ING. "Time is not in their favor."

The pressure on France has investors obsessing over a level known as "the spread," or the extra yield on French bonds compared with the bloc's safest investment: the German bund. The level has ballooned to 1.4 percentage points Thursday, the highest level since the eurozone debt crisis.

Recent polls have shown hard-left candidate Jean-Luc Mélenchon rising in the polls in France's presidential election next spring, potentially setting him up for a runoff against far-right standard-bearer Marine Le Pen.

The rise of Mélenchon, who has floated the idea of canceling some French government debt held by central banks, has been a "green light" for investors to short French government bonds, said Davide Oneglia, an economist with consultancy TS Lombard.

Investors say a cycle of forced selling intensified the rout in Europe. Investors, including hedge funds, had piled into France's government bond market, one of the world's largest, in recent years. They often trade the differences between the yields on bonds and related interest rate swap products.

Those trades, which rely heavily on borrowing and on bond yields staying relatively calm, have been unwinding in recent weeks, according to Wall Street traders. That process turned especially violent Thursday. And traders said that with French debt difficult to trade, investors sold the bonds of Italy and Greece, resurrecting fears that the debt problems that dogged the region last decade could return. In a sign of the building jitters, the euro fell close to 1% against the dollar to its weakest level in more than a year, around $1.12.

Bond yields have also smashed through milestone levels where investors often set automated orders known as stop-losses.

There have been several popular trades in the European bond market that "were all somewhat crowded and all of those kind of structures have taken pain," said Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets.

Yields, which move in the opposite direction of bond prices, remained choppy into the afternoon of the U.S. trading session. The yield on the 10-year U.S. Treasury note settled at 5.233%, according to Tradeweb, down from 5.292% Wednesday.

Igor Yelnik, founder of Alphidence Capital, a London-based global macro hedge fund, noted that funds are relying on leverage-essentially, borrowed money-more than the last time when rates were this high. Hedge funds are also a larger player in government bond markets than they were in years past.

"It's a recession scenario, which can become a vicious circle like we have seen in previous crises," Yelnik said. "Whether this scenario is going to materialize, I don't know, but this is a plausible scenario."

The selloff rippled through other markets and currencies on Thursday, with France's benchmark CAC 40 down 1.6% and indexes in Spain and Italy down more than 2%. Japan, another nation with high debt, saw its long-term bond yield rise Thursday to its highest closing level since 1996.

The Dow Jones Industrial Average rose around 20 points, or less than 0.1%, on Thursday. The S&P 500 gained 0.2% and the Nasdaq composite also added less than 0.1%.

The spreading stress in Europe raised questions whether the European Central Bank will act to help calm markets. Investors on Thursday sharply cut bets on future-rate increases by the central bank, now pricing in fewer than three in the next year.