Global Bond Yields Surge Amid Rising Deficits and Private Sector Competition

Bond yields around the world have been rising for most of this year and have recently surged. This has led to questions about whether interest rates are settling into a new higher normal or if it's just a temporary dislocation.

George Cole, Goldman Sachs' European Rates Strategy lead, attributes the global bond sell-off to a combination of factors. These include long-running themes such as large deficits and historic debt levels, competition from private sector issuance for government borrowing, and resilient growth across major economies.

The recent surge in energy prices has added to the pressure on yields, particularly in Europe where gas prices are rising. Central banks are also taking a more hawkish stance, with some willing to take action to safeguard inflation further down the line.