WSJ küsib, et kas oleme nüüd lõpuks tagasi aastas 2007.
Repricing in global bond markets is resetting the global financial system to its pre-2008 level.
Note the dates here. The 30-year U.S. Treasury yield on Tuesday touched 5.339%, its highest since 2007. The benchmark French 10-year, at about 4.1%, is its highest since 2008. The 10-year German bund, at about 3.26%, has returned to its level of 2011. The outlier is Japan. There the 10-year government bond, at about 2.93%, is now at its highest yield since 1996. But Japan embarked much earlier on the extreme monetary and fiscal policies that became common elsewhere after 2008.
Tech co.'s are willing to pay higher rates for capital in line with their hoped-for AI returns. Investors in turn are recalibrating the yields they’ll demand to hold stodgy government debt.
The return of normality augurs well for the productive allocation of capital.
This isn’t to ignore the two more worrying reasons for higher yields. Concerns about future inflation may explain some of the rise, and the fiscal mess of most Western governments should push up yields.
In the U.S., federal debt held by the public has ballooned to 100% of GDP from 32% in 2008. Rising rates create new budgetary stresses. Net interest on the debt is on track to cost the Treasury $1 trillion+ this year, the second- or third-largest line item in the federal budget.