Global bond sell-off strains budgets

The increase in global bond sales has led to higher borrowing costs for governments, corporations, and households. The yield on 30-year U.S. Treasury bonds has surpassed 5.3% for the first time since 2007, reaching its highest level in 19 years. This rise is attributed to an unexpectedly persistent economic growth despite rising interest rates, along with inflationary risks stemming from the U.S.-Iran conflict and budget deficits, as well as a lack of clear guidance from the Federal Reserve. These conditions are causing an increase in the costs of servicing public debt, now amounting to roughly one dollar of every five dollars in revenue spent on interest payments. It is expected that interest costs will reach 3.3% of GDP this year, as rising yields continue to impact national budgets and pave the way for further economic pressures.

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