Chart of the Week: What’s driving the global bond sell-off?

{"text":[[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":7.2,"text":"Good morning. Sovereign bond yields have been rising all year, and in the past few weeks the pace has accelerated across most developed markets. But there is not a clear consensus about what’s driving the sell-off. Looking at the most cited factors — inflation and indebtedness — across various countries reveals a mixed picture. "}],[{"start":28,"text":"Mapping debt-to-GDP ratios against year-to-date increases in 10-year yields reveals a loose positive relationship. But there are exceptions, such as South Korea, which has a relatively low debt-to-GDP ratio of 52 per cent, but a jump similar to that of Italy, whose public debt sits at a staggering 137 per cent of GDP. Adding inflation rates offers only a little extra clarity. Italy and Spain recently both had annualised inflation readings above 4 per cent, yet their yield increases have lagged behind those of French sovereign bonds, despite France’s tamer inflation rate of 3 per cent."}],[{"start":66.25,"text":"Growth is another part of the equation. The steady expansion in US real GDP helps explain why its yields have risen more than those of Italy, which has higher debt and more inflation. Finally, there’s the unquantifiable variable: political risk. French bond yields have surged to levels near those of the European debt crisis, as election uncertainty comes on top of a worsening fiscal situation."}],[{"start":90.4,"text":"The biggest outlier is, of course, Japan. The yield on the 10-year JGB has surged by nearly one percentage point in 2026, an increase comparable to that of Gilts and Italian debt. Yet Japanese inflation came in at just 1.9 per cent in August — the lowest on our list. Historical context is important. While other countries would be pleased with a 1.9 per cent inflation rate, decades of deflation in the Asian nation have made these “normal” inflation levels, alongside a weak yen and energy shock, a bigger jolt to the economy."}],[{"start":125.35000000000001,"text":"Send us your thoughts: unhedged@ft.com."}],[{"start":129.3,"text":"Good reads from Unhedged"}],[{"start":132.15,"text":"Hakyung: “Almost all writers fade away.”"}],[{"start":135.5,"text":"Rob: a rebirth."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":144.15,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791026567_4792.mp3"}