Bond Yields Hit Decade-Long Highs Amid Global Economic Uncertainty

Global bond yields are surging to multi-decade highs due to soaring government deficits and debt, as well as stubbornly high inflation in Europe and the US.

The main driver of this trend is the increasing amount of government spending, which has been fueled by a series of global shocks including the Covid pandemic and trade wars.

As governments issue more bonds to finance their rising deficits, they are competing with each other for capital, leading to higher interest rates. This makes borrowing more expensive for governments, businesses, and consumers alike.

In the US, government debt has topped $40 trillion for the first time this month, double what it was just 10 years ago, and servicing costs have ballooned as a result.