The IMF warns that rising inflation, high debt and AI-related borrowing could trigger a sudden spike in government bond yields, threatening financial stability.
01Summary
- 01Government bond yields in advanced economies have hit multi-decade highs due to higher energy costs and tighter monetary policy.
- 02The IMF says high debt levels make bond markets susceptible to more frequent fiscal and inflation shocks.
- 03Global public debt is on track to exceed 100% of GDP, near its highest since World War II.
- 04Hyperscalers' share of global investment-grade bond issuance has risen from less than 1% to 10% since 2024, competing with sovereign bonds.
- 05Japan's government bond liquidity has continued to deteriorate since the end of yield curve control.
02Why it matters
A disorderly rise in bond yields would raise borrowing costs for governments and businesses, erode the value of collateral, and could trigger broader market turmoil, affecting pensions and savings.
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