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Global bond rout sends long-term borrowing costs to multiyear highs

financeAug 18, 202615314

Yields on long-term government bonds climbed across major economies as 30-year US Treasury yields reached 5.33% on Tuesday, the highest since June 2007, and UK long-term debt hit about 5.85%. Rising Brent crude topped $90 a barrel after renewed Middle East tensions and a reported six-month disruption of the Strait of Hormuz, which markets see as raising inflation risk. Oxford Economics lead analyst John Canavan told the BBC that higher oil prices, large government debt levels and uncertainty over when vast AI investments will pay off all pushed investors to demand higher yields. Higher yields are feeding through to consumer costs because bond rates influence mortgage, car loan and credit card borrowing expenses, and could prompt central banks to raise policy rates. Investors have also pushed back against some governments fiscal plans, prompting UK Labour leader Andy Burnham to publicly reaffirm his commitment to existing fiscal rules. The immediate effects included a drop in US equities such as the S&P 500 and the Nasdaq, and a warning that rising borrowing costs could force companies to pay more to borrow and pass those costs to customers.

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