Are the world's foundations collapsing again

Global bond markets have experienced a new wave of selling, leading yields to rise to their highest levels in several years. However, they have not yet reached the catastrophic levels seen in 2022, when the market declined by 23%. Since the start of the year, the market has fallen by 4.2%. The reasons behind this include rising inflation driven by higher energy prices, increased government spending, investor demand for capital to fund artificial intelligence projects, alongside ongoing expectations of interest rate hikes. Although the current bond losses are less severe than those previously observed, yields remain high, supported by mixed economic data and the continued possibility of further increases if inflation persists. Current yield levels offer investors higher income opportunities and enhance their ability to withstand volatility. However, further pressures are anticipated if inflation continues to drive additional increases in interest rates.

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