Bond Rout Accelerates as Interest Rates and Inflation Concerns Bite

The global bond market is experiencing a rout, with yields scaling levels not seen in over 30 years. Japanese yields have reached key milestones, while other countries' bonds are also under pressure due to rising interest rates and inflation concerns.

The acceleration of the bond selloff is partly driven by the ongoing U.S.-Israeli war on Iran, which has pushed oil prices up 5%. This increase in energy costs weighs heavily on economies and contributes to higher inflation expectations.

Japanese policymakers are under scrutiny for their budget proposals, with investors expressing concerns about the country's fiscal outlook. The UK is also facing difficulties, with its 'moron premium' making it hard to shake off interest rate hikes.

A lower-than-expected September 15-16 Federal Reserve meeting could see interest rates rise, with a 66% probability of a hike predicted by Fed Funds futures.