The great global bond freakout

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Good morning. Yesterday, on its first day of trading, AI chipmaker Cerebras closed 68 per cent above its IPO price; at one point early in the day it was up 108 per cent. Meanwhile, Ford, the car company founded in 1903, is up 20 per cent or so in the past two days following the launch of a unit that will make batteries for AI data centres. Are you old enough to remember what it felt like in markets in the spring of 2000? No? Well, we do, and it felt like this.

Today, bonds and crypto. Tell us what you think: [email protected].

Not now, UK politics

Join me on a magical mystery tour of headlines and factoids about weakness in the global government bond markets this week:

• “The US government has sold 30-year debt at a 5 per cent yield for the first time since 2007 amid mounting signs that Donald Trump’s war in Iran has unleashed a new surge in inflation.” Oof!

• Japan’s 10-year yield is now above 2.6 per cent. That’s comfortably the highest I can ever see it on my screen, ever. Its 30-year yield is getting close to 4 per cent. You read that right. The country that kept bonds in the deep freeze for decades is finally seeing some movement, and it’s up (for yields).

• German Bunds are yielding 3.6 per cent for the 30-years, the highest since 2011. The 10-years are also over 3 per cent.

I think you get the idea here. Bonds are being put through the mincing machine globally at the moment, primarily due to signs that energy-led inflation is taking hold. Central banks may have to start cranking up rates to deal with this, and that pushes up borrowing costs everywhere. This brings me to:

Putting that point last demonstrates the UK is not such an outlier. Yes, the UK is experiencing one of its periodic political dramas. And yes, gilts have weakened substantially. Yes, this is bad. But is it all the fault of the politics? Far be it for me to play down the powers devolved to Andy Burnham, mayor of Greater Manchester and pretender to the top job in Downing Street, but as far as I’m aware, he has nothing to do with the Japanese government bond curve.

Clearly, some of the stress about gilts is overdone. That’s not to say they are not vulnerable. They lack the protections that some other major bond markets enjoy — the alphabet soup of European Central Bank protection measures in the Eurozone, the luxury of being the world’s dominant reserve assets in the case of US Treasuries, and so on. The UK economy has niggling inflation problems, which bond investors don’t like. And there was that whole Liz Truss thing.

Higher borrowing costs are indisputably unhelpful for the UK. But sterling is steady (around $1.35 or €1.15). You can put your tin hats away.

Politics are making a bad matter marginally worse, for sure. Politicians themselves could make it all much, much worse still. (If you are one, please read this.) Specifically, things that would make it worse would include a run-up (real or potential) in inflation, fiscal incontinence or loads of new borrowing. Other than that, the personality politics really don’t matter that much. A bit, absolutely, but not lots.

I know I’m a broken record on this, but everyone calm down.

UK disaster tourists, please feel free to email and tell me I’m wrong.

Crypto: shockingly, still not money

I know, I know, it’s a big surprise. But the Federal Reserve has reminded us that, no, crypto is still not money.

In a new report, Economic Well-Being of US Households in 2025, released earlier this week, the Fed notes that nearly one in 10 Americans had bought or held crypto in the previous year. That’s huge, although it may be flattered by the fact that around the period in question, bitcoin was having a moment, streaking up to record highs of $120,000 or so a pop in October 2025. (It’s now closer to $80,000, which, as a reminder, is still $80,000 above fair value.)

So this stuff is pretty widely held. But, the Fed added, “only 2 per cent of adults said they used cryptocurrency to make a financial transaction”. Of those who did, a quarter of them said the “person or business receiving the money preferred cryptocurrency”. Make of that what you will. A lack of trust in banks — supposedly one of crypto’s calling cards — was a very minor driver. Yes, the unbanked and those sending money to friends and family were more active users, which does suggest a somewhat greater role for remittances and for the marginalised. Generally, though, crypto is failing to step up as the means of payment that many true believers promised, nearly two decades into its existence. 

It’s a speculative fan token pure and simple, and that’s fine, I guess. A curse on whoever decided to call these things currencies.

One good read

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