Rising bond yields should spur governments to go for growth

Brutal bond sell-offs are not what you expect after interest-rate cuts. But since the Federal Reserve started reducing its rates in September the yield on America’s ten-year Treasury has risen by about a percentage point, to 4.7%. A global repricing has followed. In Britain yields have climbed to about where they were after Liz Truss’s disastrous “mini-budget” in 2022, despite interest-rate cuts and austere government rhetoric. Yields are up in the euro zone, Canada and across emerging markets. The striking exception is China, where investors are worried about growth. Almost everywhere else indebted governments, companies and homeowners must grapple with the rising cost of capital.