UK Borrowing Hits 28-Year High Amid Bond Turmoil
Global bond markets are in turmoil. Borrowing costs worldwide hit multi-year highs on Thursday.
In the UK long-term borrowing costs reached 6%. That is the highest level in 28 years.
The US 10-year Treasury yield also rose. It hit its highest level since 2002.
A new report said Japan's 10-year yield is rising. It may reach a 30-year high.
Higher oil prices are putting pressure on bonds. Investors fear high oil costs could cause inflation to return.
Because of this investors believe central banks will raise interest rates soon. Fears about the US deficit also pushed UK borrowing costs higher.
Many worry the US deficit is becoming unsustainable. Bloomberg reported that government debt was changing worldwide.
This was linked to uncertainty from the war in the Middle East. Bloomberg described analyst Jim Bianco as still optimistic despite rising yields.
Key Terms 4
- borrowing costs Interest rates governments pay when they borrow money.
- Treasury yield Interest rate the US government pays on its bonds.
- US deficit Amount by which the US government spends more than it earns.
- Jim Bianco Financial analyst who studies bond markets.