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Borrowing costs are pushing to multi-decade highs with no sign of abating, as concern over inflation, the direction of interest rates, and elevated debt loads bears on global bond markets.
Inflation sits at the center of the move. When price growth runs ahead of expectations, the real return on fixed-rate securities shrinks, and investors demand higher yields to compensate.
Bond prices fall as yields rise, and that cycle has shown no clear break. The rate outlook presses in the same direction.
Holders of existing bonds face losses when new issuance carries higher coupons, making securities bought in a lower-rate environment worth less in the secondary market.
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