Global Bond Yields Fret Inflation & Deficits

The useful part

For those worried about the impact of deficits and inflation on US bond yields, it's worth taking a trip around the world to get a better picture. Global bond yields for many of the world's ten largest economies are behaving similarly. Across the Globe, the US, Germany, Japan, France, Italy, and Brazil- seven of the ten largest economies- saw both benchmark government bond yields and inflation rates rise simultaneously.

How it works

• The table below shares global deficit and inflation data, as well as yield changes, to show that what is happening in the US bond markets is generally occurring around the world's most developed economies.
• UK gilts moved even further, up 68 basis points to 4.68%, with inflation holding near 3.8%.
• India is the clear outlier, the one major global economy where both bond yields and inflation eased.
• Russian yields have fallen slightly but remain well above all the other countries listed.
• Debt loads and deficits add another layer of complexity to the global rising-yield story.

What to take from it

Japan's debt exceeds 237% of GDP, and every additional basis-point increase in yields raises that country's financing costs, as it does in the US and other countries.

Details worth keeping

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