A surge in global bond yields threatens trouble

It is A brave investor who calls the end of a four-decade trend. But bond yields have risen so far and—in recent weeks—so fast that many market participants now believe the era of low interest rates to be over. Since early August America’s ten-year Treasury yield has traded in excess of 4%, a level unseen from 2008 to 2021. On October 3rd it hit a 16-year high of 4.8%, having risen by half a percentage point in a fortnight. The moves have spilled over globally: to Europe, where they threaten to bring about a fiscal crisis in indebted Italy; and Japan, which is clinging on to rock-bottom interest rates by its fingertips (see chart 1).