Global Bond Yields Surge, Threatening Trouble

The recent surge in global bond yields, particularly in the US, has raised concerns among investors that the era of low interest rates may be coming to an end. Factors such as expectations of future Fed policy changes and the term premium have driven up yields. The increase in the term premium can be attributed to a combination of supply and demand dynamics, as well as fundamental factors such as a wobbly global economy and America's fiscal deficit. The rise in US bond yields has also spilled over to other regions, including Europe and Japan, where it threatens to bring about a fiscal crisis in Italy and poses challenges for the Bank of Japan in maintaining its negative interest rate policy.