A global sell-off in bond markets deepened this week amid fears over high government spending in developed economies, in a development which could have severe implications for heavily indebted African economies.
Earlier this week, the yield on thirty-year US treasuries hit 5, while Japanese government bonds hit a record high of 3.29. In the UK, thirty-year gilts are currently yielding more than 5.5, the highest yield for around three decades. The eurozone is seeing similar moves in its bond markets.
This upward pressure on yields has largely been sparked by market fears over the amount of government spending by developed economies, particularly since the Covid-19 pandemic. The higher cost of raising capital reflects increased scepticism over the sustainability of such spending. With global debt hitting a record 324tn early this year, markets are reluctant to finance yet more spending.