“From Tariffs To War”

When does all the winning start? pic.twitter.com/M9zvu4vG3v

— Ron Filipkowski (@RonFilipkowski) August 18, 2026

 This looks bad. Is this bad?

Bond markets are entering an era where the inflation and interest rate outlook is ‌more uncertain and the upside risks are greater, as U.S. President Donald Trump’s policies — from tariffs to war — upend the global order.

Debt levels in developed countries are reaching levels that look increasingly unsustainable, with the U.S. debt pile nearing $40 trillion. The war in Iran is dragging on, pushing up oil prices and inflation and hitting global growth.

In addition, massive borrowing by technology companies to fund a buildout of artificial intelligence infrastructure is competing with demand for government bonds.

Taken together, that means the post-financial crisis period of low rates ​and subdued inflation might be behind us, said Kjersti Haugland, chief economist at investment bank DNB Carnegie.

"It coincides with the very high level of government debt in many countries, particularly Japan, the U.S., ​France and the UK," she said.

Thirty-year bond yields in the United States, the world's deepest and most systemically crucial government bond market, hit their highest since 2007 as oil prices rose ⁠back above $90, fanning inflation worries as U.S.-Iran peace hopes faded.

In Japan, inflation angst and expectations that Japan could hike interest rates as early as September pushed 10-year borrowing costs to a three-decade high just under 3%.

In Europe, Germany's ​10-year Bund yield touched its highest since 2011 , French yields were at their highest since 2008 and Britain's 30-year borrowing costs neared peaks hit in May that marked the highest levels since 1998. When a bond's yield rises, ​its price falls.

Yup, it is bad.

The selloff in government bond markets matters because the repercussions ripple through economies. Sovereign debt sets the benchmark for borrowing costs for companies and other loans, including household mortgages.

When elephants fight, the grass gets trampled.