Why global bond markets are convulsing

Almost everywhere, government-bond yields are in flux. Those on ten-year American Treasury bonds are now at 4.7%. German bunds offer 2.6%, compared with close to 2% in December. Japanese bond yields are climbing (see chart 1). Things are particularly extreme in Britain, where gilt yields recently reached almost 5%, their highest since 2008. Rising yields are bad news for governments, which must pay more to service debts. They are also painful for all sorts of other borrowers, including many mortgage-holders, whose bills ultimately depend on governments’ borrowing costs.