Why bond yields are rising across the world
By Nova Safo

Government bond yields have been rising for a couple of months now, but today they hit new highs for the year in the U.S., Japan, Germany and the United Kingdom. Yields rise when prices fall, and prices fall when investors sell, which a lot of them are doing right now thanks to an improving economy. But there is a dark side to rising bond yields, because it could also be an indication that investors are worried about a lack of liquidity, says Karen Petrou of Federal Financial Analytics. “We’re really looking at the unintended result of well-intentioned crisis reforms,” she says. Those reforms require banks to hold onto more cash. As a result, they are not playing as big a part in buying and selling bonds, which Petrou says is leading to “significant structural changes in the bond market that have the financial system very, very spooked.”