From Yahoo Finance: 2025-05-23 19:07:00

Global bond markets are seeing yields jump as governments run large deficits and borrow more, sparking inflation fears and growth concerns. US bond yields spiked, with the 10-year hitting 4.61%, while the UK and Germany also saw increases. Japan’s bond yields soared to 3.16%, the highest since 1999, signaling worries about fiscal health.

Government borrowing and deficit spending are alarming bond investors worldwide, impacting economic growth. Rising inflation from heavy borrowing can lead to higher interest rates, affecting consumers and businesses. Bond markets are sending a message to governments to curb borrowing in the post-low interest rate era to sustain economic stability.

Japanese bond yields have surged, jeopardizing the carry trade and prompting domestic investors to return to Japanese bonds. Higher Japanese yields pose a risk to US Treasurys, potentially signaling US fiscal risks. The dynamic shift in bond yields could impact stock prices, initiating a cycle of bonds affecting stocks and vice versa.

Investors should focus on Japan’s bond market turmoil as it could significantly impact global markets. The recent sell-off in Japanese government bonds has the potential to disrupt US equity valuations, posing a challenge for the US treasury market. Higher yields in Japan could lead to a shift in investor preferences, affecting US assets.



Read more at Yahoo Finance: It’s not just US bonds. Governments around the world are facing spiraling debt costs.