From 2h agoBond market rout deepens as inflation fears keep risingGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The bond market is doing its traditional job of intimidating governments – and investors – as fears of an inflation shock from the Iran war grow.The bond sell-off which gripped the markets last week is continuing this morning, driving up governments’ cost of borrowing from Tokyo to Washington DC.With the strait of Hormuz still largely closed, the prospect of a lengthy period of shortages of oil and gas, which would push up costs of energy, transport and food, is growing.Last Friday, global government borrowing costs soared – with the yield (or interest rate) on Japan’s 30-year bond hitting 4% for the first time.US and eurozone debt also suffered, as traders bet that central banks will fored to raise interest rates, or abandon hopes of rate cuts, to stem the inflationary waves hitting the global economy.As analysts at ING put it:
double quotation markFirst, even if the war were to end tomorrow, energy prices may not fall as far as many expect. Significant drawdowns in oil inventories are likely to keep upward pressure on prices for some time yet.
