Global bond sell-off deepens amid fears US economy may be running too hot – business live

Rolling coverage of the latest economic and financial news

There is a danger that government bonds go into “a critical chain reaction”, warns analyst Bill Blain in his daily Morning Porridge newsletter.

In that scenario, rising bond yields raise government’s refinancing costs, leading to increasing deficits. That pushes up the refinancing risks and leads to a higher supply of bonds on the market, which pushes up yields further.

After years of low rates, cheap money, inflated expectations, and speculation, the whole edifice of modern markets are vulnerable to a corrective reset. It could shake every financial asset from AI to Zero Coupon Bonds.

Brent crude oil is up close to 6% from the lows yesterday. The speech by President Pezeshkian of Iran at the UN yesterday did not suggest prospects for imminent peace were good.

There has also been a notable pick-up in reports that the US administration will soon announce an export ban on diesel. This would likely lead to further rises in diesel on international markets and could also lift gasoline prices in the US with the surplus diesel in the US causing crude oil refiners to cut production of not just diesel but gasoline as well.