Bond market raises risks to global economy — ABC News Australia

In Australia, the yield on 10-year government bonds has approached a 15-year high, while the yield on 10-year US bonds has reached its highest level since the start of the global financial crisis. This is making investors more cautious about the credit risks of major Western states, ABC News Australia reports. As bond prices fall, their yields rise, and so does the cost of borrowing. The publication notes that if inflation in Australia and globally remains high, interest rates may increase or remain burdensome for borrowers for a long time. Under such a scenario, pressure on property and share prices intensifies. Reduced investments in the US Former banker and writer Satyajit Das called the US economy a key 'pressure point' for the global bond market. In 2025, the Reserve Bank of Australia reduced the amount of dollar-denominated assets in its foreign exchange reserves portfolio by 10%, returning it to the 2012 level. The Dutch central bank said it had moved tens of tonnes of gold from the United States and Canada, explaining this by stronger crisis preparedness amid geopolitical instability. Norges Bank Investment Management proposed reducing the share of government debt securities in its total bond holdings from 70% to 50%; the largest reduction may affect US Treasury bonds. More current news is available on the UA.News Telegram channel Telegram. According to ABC News Australia, China, Brazil, India and Japan have also reduced their investments in US government bonds. Das listed France, Italy, the United Kingdom and Japan among countries with high debt, economic stagnation, deep structural problems and political tensions. Deficit and artificial intelligence The catalyst for the latest sell-off was an August statement by US Treasury Secretary Scott Bessent on at least doubling buybacks of bonds with maturities of 10 to 30 years, to $4 billion. Before that, reports that US public debt had risen to $40 trillion had already triggered a sell-off in securities. The repurchase of long-term bonds was intended to lower rates, but, according to AMP chief economist Shane Oliver, without reducing the budget deficit, such a move is only a temporary solution. Large-scale investments by technology companies in artificial intelligence and data centres, which require debt financing, are also putting additional pressure on bond yields. Adam Donaldson, head of markets and rates research at Commonwealth Bank, also links the rise in the neutral rate to spending on defence, infrastructure, the transition to a low-carbon economy and a lack of fiscal discipline. In his view, confidence in new Federal Reserve Chair Kevin Warsh will depend on his ability to conduct monetary policy independently of the Trump administration. Das believes that high inflation may limit the ability to cut rates or resort to large-scale money printing in the event of a new crisis. He also warned that rising rates could lead to a significant repricing of stock assets that he considers overvalued. Read us on Telegram and Sends Download our app