{"id":788446,"date":"2026-10-01T10:38:13","date_gmt":"2026-10-01T10:38:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/788446\/"},"modified":"2026-10-01T10:38:13","modified_gmt":"2026-10-01T10:38:13","slug":"global-bond-sell-off-intensifies-as-uk-long-term-borrowing-costs-pass-6-government-borrowing","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/788446\/","title":{"rendered":"Global bond sell-off intensifies, as UK long-term borrowing costs pass 6% | Government borrowing"},"content":{"rendered":"

The turmoil in global bond markets has intensified amid fears the US deficit is reaching unsustainable levels, helping drive UK long-term borrowing costs to a 28-year high.<\/p>\n

The threat of a renewed round of inflation from the persistently high cost of oil<\/a> has spooked investors, who believe central banks will be forced to raise interest rates in the coming months to prevent price increases from becoming embedded.<\/p>\n

In a morning of hectic trading on Thursday, the yield, which is a proxy for the interest rate, hit 6% on Britain\u2019s 30-year bonds for the first time since 1998.<\/p>\n

The yield on five- and 10-year UK bonds also rose, driving up the government\u2019s borrowing costs and adding to the pressure on the chancellor, John Healey, before the budget later this month.<\/p>\n

Stock market investors also sold heavily, knocking 1.7% off the FTSE 100 in London during early trading. Bourses in other parts of Europe were also hit, with Germany\u2019s Dax and France\u2019s CAC 40 falling by 1.1%.<\/p>\n

\u201cThere is carnage in the bond market which is hitting stocks hard,\u201d said Neil Wilson, the investor strategist at Saxo UK. \u201cIt looks like the relentless rout in the bond market is sending investors running for cover.\u201d<\/p>\n

A graphic showing the yield, or interest rate, on UK 30-year bonds since 1996<\/a><\/p>\n

The bond sell-off around the world is being driven by fears of high inflation, as the Middle East conflict continues to restrict oil supplies from the region.<\/p>\n

On Wednesday, US 10-year Treasury yields hit their highest level since 2002, while Japan\u2019s 10-year yield rose towards the 30-year high set last month.<\/p>\n

US bonds weakened despite inflation data on Wednesday coming in lower than forecast, which was expected to calm investors\u2019 nerves about the prospect of further increases in the cost of borrowing by the US Federal Reserve.<\/p>\n

Traders remain anxious that the Fed will continue to raise interest rates to fight inflation, mainly in response to the strength of the US economy and the prospect of workers bidding up their wages.<\/p>\n

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Mohit Kumar, an economist at Jefferies, said there was growing concern at the amount of debt being issued to fund government deficits, as well as inflation concerns.<\/p>\n

\u201cInflation, deficit and issuance concerns continue to weigh on the bond market,\u201d he said.<\/p>\n

\u201cThere is also a buyers\u2019 strike as investors do not want to step in till we get some form of stability. Hedge funds have suffered in the latest round of sell-off and do not have the risk appetite to fade the move. Real money, potentially has the risk appetite, but won\u2019t step in till we get some stability.\u201d<\/p>\n

Axel Rudolph, the chief technical analyst at the investing and trading platform IG, said: \u201cWhile the latest data has reduced expectations of an October Fed rate hike, investors remain wary that persistent inflation and higher oil prices could keep rates elevated for longer.<\/p>\n

\u201cThe dollar is benefiting from that caution, climbing to a three-month high, while the prospect of a December rate increase keeps pressure on bond markets.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The turmoil in global bond markets has intensified amid fears the US deficit is reaching unsustainable levels, helping…\n","protected":false},"author":2,"featured_media":788447,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-788446","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/788446","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=788446"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/788446\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/788447"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=788446"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=788446"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=788446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}