Global bond rout gathers pace as inflation fears mount

Key Points:

• Government bonds experienced a global sell-off, pushing borrowing costs to multi-decade highs, with German 10-year bund yields reaching their highest since 2011 and Japan's 10-year yield surpassing 3% for the first time in 30 years.
• The 10-year U.S. Treasury yield stayed above 4.8%, while British 10-year gilt yields hit a post-2008 high of 5.25%, reflecting investor concerns about inflation and fiscal health.
• Rising inflationary pressures, exacerbated by Middle East conflicts driving up oil prices, alongside high debt levels in major economies, have unsettled investors and increased bond yields.
• Central banks globally are expected to implement interest rate hikes soon, with the Federal Reserve, Bank of Japan, and European Central Bank signaling tightening monetary policy, which negatively impacts bond prices.
• Equity markets have turned risk-averse, declining after strong gains earlier in the year, as rising borrowing costs and high global debt levels create a more fragile economic environment according to market experts.