Bond Market Turmoil Drives Global Borrowing Costs to Historic Highs

Global bond markets are experiencing turmoil due to fears of high inflation, which is driving up borrowing costs for governments around the world. In the UK, long-term borrowing costs have reached a 28-year high, with yields on 30-year bonds exceeding 6% for the first time since 1998.

The yield on five- and ten-year UK bonds also rose, increasing the government's borrowing costs ahead of the budget later this month. US government borrowing costs are at 24-year highs, with 10-year Treasury bill yields hitting 5.34%, while thirty-year US Treasury bond yields have risen above 5.67%, their highest level since May 2002.

Stock market investors sold heavily, knocking almost 1.7% off the FTSE 100 in London, its worst daily fall since May. Bourses in other parts of Europe were also hit, with Germany's DAX falling 0.9% and France's CAC 40 losing 1.6%. Neil Wilson, investor strategist at Saxo UK, said 'There is carnage in the bond market, which is hitting stocks hard.'