Global Bonds Suffer as Central Banks Unleash Rate Hikes

Central banks around the world have raised interest rates in recent days to combat rising inflation, leading to a sell-off in bonds and increased borrowing costs for governments. The US Federal Reserve (Fed) raised its benchmark rate for the first time in three years, while the European Central Bank (ECB) hiked its main rate to 2.5pc.

The yield on 10-year US Treasury bonds climbed back above 5pc two days after the Fed's decision, and the 10-year French yield hit a 13-year high of 4.56pc. The UK gilt yield also rose, reaching as high as 5.31pc.

Japan's central bank voted to raise its target interest rate from 1pc to 1.25pc, the highest level since 1995. Kazuo Ueda, the Bank of Japan governor, refused to rule out further tightening measures, saying 'That depends on how price conditions develop.' Scott Bessent, US treasury secretary, warned currency traders not to bet against the yen.