How Debt, Inflation and Politics Are Driving Up Borrowing Costs

A prolonged period of elevated long-term bond yields is ramping up borrowing costs around the world. That’s because investors are demanding extra compensation for holding government debt in the face of entrenched budget deficits, sticky inflation and burgeoning questions around central bank independence.

Expectations that a cycle of central bank rate cuts will end soon — and even give way to rate increases in some parts of the world — are also denting sentiment, pushing yields on longer-dated debt back to levels last seen in 2009.