Global bond markets wobble as US debt worries and Middle East tensions rise

Over the past two weeks, government bond markets in the United States and other leading economies have experienced sharp volatility, with the 10-year US Treasury yield rising to 4.8% and the 30-year hitting a post-2008 peak. Economists attribute the move to a fresh appraisal of the United States' $40 trillion debt burden and persistent deficits, compounded by higher oil prices after renewed US-Iran hostilities. Central banks, including the European Central Bank and the Reserve Bank of Australia, are expected to lift rates, further pushing yields higher.

Meanwhile, massive borrowing by AI-focused tech firms and climate-driven inflationary shocks add structural pressure to interest rates. The higher yields are already inflating government borrowing costs in the UK, Australia and vulnerable emerging markets, threatening fiscal stability and raising mortgage and corporate financing rates worldwide.