Bond yields climb everywhere, and the bill arrives in Whitehall

A sell-off with no single owner

The move in government bonds on Monday and Tuesday was general rather than local. The Wall Street Journal described yields soaring around the world in what it framed as a challenge to government borrowing, and, in a separate piece, as the bond market issuing world leaders a failing grade. US borrowing costs hit fresh highs, which the BBC attributed to inflation fears.

In London the effect was sharper still. This is Money reported gilt yields spiking amid the global rout, sending UK long-term borrowing costs to a 28-year high — the highest level since 1998 on the paper's reckoning.

Equities did not escape. US stocks fell as oil and bond yields spiked and as the WSJ noted the US-Iran war heating up. Gold, which had been rising after the Jackson Hole speech, extended its decline, with higher yields and firmer oil cited as the drag. In Tokyo the Nikkei closed 2.2 per cent lower, pulled down by chip-related names.

The commentary arrived quickly. The Wall Street Journal ran an opinion piece headlined "Hurray for the Bond Market", and a separate guide to owning bonds while they are selling off. The Guardian's leader column took the shock as a lesson for Andy Burnham.

The fiscal arithmetic moves

For the Treasury the sums changed within a day. This is Money put the debt interest headache at £6bn, and reported that the same market move had blown a £6bn hole in fiscal headroom, with middle earners facing a further tax squeeze as a consequence.

That framing was reinforced from another direction. The Guardian reported that a thinktank has told Healey to fund defence spending from a tax rise on middle earners. Two separate stories, the same group of taxpayers.

Burnham features throughout. City A.M. argued he is in hock to the bond markets whether he likes it or not; the Guardian's editorial said he should take note of the global bond shock. On the domestic policy side, retail groups including M&S and Tesco warned that his business rates raid could drive up the cost of living. Elsewhere in the tax debate, figures reported by This is Money suggest reinstating tax-free shopping for tourists would boost UK GDP by £11.5bn, a policy Sadiq Khan has now backed.

Away from the Budget, City A.M. set out how the Treasury became "fed up" with the Bank of England's payments plan.

Europe's inflation, Asia's flows

Euro zone inflation returned above 3 per cent in August, coming in at 3.3 per cent, with energy prices the main push. Euronews described an energy shock and a looming ECB rate hike; CNBC reached the same conclusion, saying higher interest rates are likely to follow. Hong Kong property watchers were already pricing rate rise expectations after the Fed chief's comments.

Currencies in Asia met the same headwinds. The WSJ reported Asian currencies pressured by rising US Treasury yields and oil prices, with the yen consolidating as traders digested remarks from Katayama and Ueda. Japan vowed to keep an eye on the yen as inflation fears rise.

China supplied a different set of numbers. The country's pension fund doubled offshore investments to a new high of US$8.6bn in search of higher returns, and top brokerages stepped up their global push as overseas profits surged. Industrial profit growth ran at its fastest in four years on the back of the tech push, though the SCMP noted signs of an economic divide. Beijing ended the dividend tax exemption for expatriates, applying a 20 per cent rate.

London, meanwhile, lost ground as a venue. Three more UK-listed firms agreed takeover offers, described by This is Money as the latest assault on the City. Shein made its long-awaited Hong Kong debut at a $26bn valuation, its shares sliding on the first day.