A confluence of events is pushing the cost of borrowing higher across the developed economies.
Investors are now factoring in the increased risk of holding long-term government bonds as inflation moves higher, as nations continue to add to their debt and as geopolitical risk continues unabated.
Since the start of the year, the yield on 10-year government bonds in the UK has increased by 68 basis points to 5.22% as of September 1st.
The benchmark 10-year U.S. Treasury note has increased by 60 basis points to nearly 4.80%, while Japanese government bond yields have increased by 94 basis points and are now testing 3.0% for the first time since 1996.
The traditionally lower yields across Europe are moving higher as well, with a 60 basis point increase in France, 56 in Italy, 46 in Spain and 44 in Germany.
Higher long-term government bond yields will translate into higher costs for mortgages, automobiles and other big-ticket purchases for consumers, and also higher investment costs for businesses.
