Bond Vigilantes Emerge as Global Markets Shudder

For decades, investors have been advised to avoid government bonds due to their low yields. However, this week's market turmoil has led to a surge in long-term bond yields across developed countries.

The yields on U.S. 30-year Treasuries have reached over 5.2%, their highest since 2007. British 30-year bonds are yielding around 5.8%, the highest level since the late 1990s. Canadian 30-year bonds, with a yield of 4.2%, are paying the most since 2009.

The increase in bond yields is seen as a sign that investors can no longer ignore bonds. The U.S. Treasury's Secretary, Scott Bessent, has intervened by doubling the Treasury's purchases of long-term U.S. bonds to try and cap rising yields.

However, this intervention may have little effect, and market forces are still driving up bond yields. As a result, governments' borrowing costs will rise, which could rattle stock prices and shake the economy.