By Wolf Richter for WOLF STREET.
The 10-year yield of UK government securities rose to 4.82% today, the highest since July 2008. The 30-year gilt yield rose at one point today to 5.47%, the highest since 1998, though it backed down to 5.38%. So the UK is a little ahead of US Treasury yields (4.69% and 4.93% respectively).
There was a lot of handwringing in the financial media today and recently about those surging yields, with terms like “gilt market rout” getting into the headlines, and some even seeing a “return of the bond vigilantes,” etc. etc. But wait a minute…
Back on July 29, 2020, the 10-year gilt yield had dropped to an all-time low of 0.09%, back when everyone holding gilts was clamoring for yields to go negative because these holders would benefit from falling yields because bond prices rise when yields fall, and that path into the negative would be the necessary and logical continuation of the 40-year bond bull market and make it an eternal bond bull market, with yields falling ever deeper into the negative, or whatever.