Japan's Bond Yield Surges Past 3%: Central Banks Face Uncharted Territory

Japan's 10-year government bond yield has breached 3% for the first time since 1996, while the US 10-year yield approached 4.8%. This rise in global bond yields is causing concerns about higher inflation and interest rates.

Veteran banker Uday Kotak warned that central banks may be forced to expand their balance sheets, potentially driving inflation and short-term rates higher, leading to increased volatility across global bond markets.

Kotak said 'As their government debt and deficits go up, central banks may have no option but to expand balance sheets (print money)'. If so, inflation goes up, short end rates go up,' he added. 'Be ready for a roller coaster ride in interest rate markets.'

For India, the simultaneous rise in bond yields across major economies amid high crude prices and renewed hawkish signals from the US Federal Reserve on inflation is a key concern.