Turmoil on global bond markets pushed government borrowing costs higher across the world yesterday.
Investors took fright at the prospect of interest rates staying higher for longer – sending yields on US ten-year Treasury bonds close to their highest levels since 2007.
That piled pressure on US stock markets, with the Dow Jones and S&P 500 both down by more than 1pc and the tech-heavy Nasdaq losing around 2 per cent.
In Britain, yields on 30-year government bonds continued to rise, closing in on levels last seen in the wake of Liz Truss’s mini-Budget last year.
Yields on shorter-dated UK bonds also climbed and the FTSE 100 fell by 0.5 per cent.
The prospect of interest rates staying higher for longer – sent yields on US ten-year Treasury bonds close to their highest levels since 2007.
It was a similar story in Europe, with a sell-off of German bonds.
But the main action was in the US, sparked by stronger-than-expected job vacancy figures in the world’s biggest economy.
The Job Openings and Labour Turnover Survey (Jolts) reinforced fears that the US Federal Reserve may go for another interest rate hike next month, having left them on hold last time.
UK rates are seen as less likely to climb again given growing signs of economic weakness. That disparity has sent the pound lower, dipping below $1.21 to hit its lowest level in nearly seven months yesterday.
Attention will be even more heavily focused on US jobs figures due out at the end of this week.
Quincy Krosby at broker LPL Financial said: ‘Friday’s payroll data should help clarify if the labour market is as strong as the Jolts report implies, because at this stage of the Fed’s “last mile” to untangle the remaining “sticky” inflation, a stronger than expected report will be the last thing the Fed wants to see, not to mention financial markets.’
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