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Government borrowing costs are rising sharply across major economies in a deepening global bond sell-off.
Here is what that means: a bond sell-off happens when investors dump government debt faster than buyers appear, and to clear that debt, governments must offer higher interest rates to attract new buyers.
The United Kingdom's borrowing costs have climbed to their highest level since 2008. Japan's bond yields, the rate the country pays to borrow, have risen to points last seen in the 1990s. Inflation fears are the driver.
When investors expect prices to keep rising, the fixed income from a government bond erodes in real value, so they demand a higher yield to compensate for that erosion. That is the basic bond market arithmetic.
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