Bond Market Turmoil: Rising Rates Spark Global Investor Concerns

The global bond market has been shaken by rising borrowing costs, but so far, the selloff has remained orderly. The surge in bond yields is attributed to higher energy prices, inflation risks, and the prospect of tighter monetary policy.

Short-term US and eurozone yields have reached multi-year highs, while 30-year yields across major markets are hovering around levels not seen in over a decade.

The US Treasury is preparing to at least double its longer-dated bond buybacks, with the first operation scheduled for Wednesday. Investors are watching whether Japan's $2 trillion Government Pension Investment Fund will increase allocations to domestic bonds and reduce its exposure to overseas debt and equities.

The European Central Bank is widely expected to raise interest rates by another 25 basis points on Thursday, matching its June move. The key question for investors is what comes next as inflation moves back above 3% and energy prices rise amid geopolitical tensions.