https://www.economist.com/briefing/2026/10/08/the-countries-most-threatened-by-turbulent-bond-markets +
https://www.economist.com/leaders/2026/10/08/will-bonds-blow-up
QT{{” Central banks have responded with higher rates. In September the Federal Reserve raised them for the first time since 2023. Kevin Warsh, the Fed’s chair, cited “geopolitical developments”. The European Central Bank has raised rates twice in recent months and the Bank of Japan has lifted its main rate to a 31-year high.
That marks a dramatic shift. Before the war markets expected three cuts from the Fed by March 2027, taking its target range to 2.75-3%. They now expect rates to reach 4.25-4.5% by then—a swing of 1.5 percentage points in barely seven months. Europe has seen a similar U-turn. Investors had expected the ECB to hold rates steady. But even after its two recent increases, they now foresee at least two more by mid-2027.
Short-term bond yields, which closely track expectations for central-bank rates, have moved sharply higher as a result. Across the rich world, two-year yields are up by over a percentage point on average from the start of the year. Longer-term yields have followed, though less swiftly. “}}
