The rise in bond yields is a global phenomenon, rooted in investors’ unease over unchecked government spending and intensified by bets that central banks may keep interest rates higher for longer.
The US Treasury market gets the attention as the largest and most influential bond market in the world. But yields are also rising on government bonds in France, Germany, Italy, the United Kingdom, Japan, Canada and Australia.
Yields this week touched multi-year and multi-decade highs. Investors are selling bonds, pushing prices lower and yields higher. Yields rise when bond prices fall.
Bond yields set interest rates across the economy, and a steep rise in yields can raise the cost of mortgages, auto loans and student borrowing, making life less affordable.
“At this stage, the bond market is not signaling a crisis,” Kristian Kerr, head of macro strategy at LPL Financial, wrote in a note. “However, it is sending a warning that merits attention.”
