A bond market crunch meets the AI boom. Aggravated by still-rising oil prices, accelerating inflation, and the threat of higher interest rates and rising government debt estimates, the bond market has been spooked again, casting a pall over AI-obsessed stock markets.
The U.S. Treasury long bond yield has hit its highest level since before the Great Financial Crisis in 2007, with 30-year yields topping 5.159%, while 10-year yields have jumped to their highest in more than a year.
I’ll get into that and more below.
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BONDS SPOIL THE AI PARTY
As G7 finance chiefs meet in Paris on Monday, bond stress is spreading around the world.
Japan’s long-dated government yields spiralled to record highs on Monday. European yields are at their highest levels, variously, in 15 to 20 years, while Britain, facing a fresh political psychodrama amid brewing challenges to Prime Minister Keir Starmer’s leadership, is seeing its highest long-term borrowing costs since the 1990s.
Interest rate rises are expected in Europe and Japan next month, with a more than 50% chance the Fed will follow by year-end.