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Bond Meltdown Continues - What's Going On?

Economics Help

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Government bond yields have hit levels last seen before the financial crisis — US Treasuries above 5.2%, UK gilts at 5.4%. But this isn't just a US story: yields are rising in every major economy at once.

In this video I look at why borrowing costs are back at 2007 levels when the economy looks nothing like 2007. The AI investment boom is creating a new borrower the size of a government. Government deficits keep rising. And the Gulf conflict has caused inflation

But when you break down this year's rise in US yields, almost none of it is higher expected inflation. Nearly all of it is the real yield — investors demanding a genuinely higher return to lend.

UK mortgage rates keep climbing even though the Bank of England hasn't raised Bank Rate, what happened to anyone who bought a 30-year gilt in 2021, and the warning signal in the bond market that suggests today's high yields may not last.

Chapters
0:00 A £100 bond worth £35
0:47 A global sell-off
1:23 AI borrowing vs governments
3:05 Oil, diesel and inflation
4:27 What's actually driving yields
5:27 Deficits and the debt spiral
7:25 Why your mortgage is rising
8:25 The counter-case

Sources
https://substack.com/@chartstorm
https://www.ft.com/content/d751ad99-5...
https://www.ft.com/content/00f94018-e...
https://www.ft.com/content/bcf0715b-4...
Financial Times — bond market coverage, September 2026
Congressional Budget Office — long-term budget projections
FRED (Federal Reserve Bank of St Louis) — DGS10, DFII10, T10YIE, DCOILWTICO
Bank of England — Bank Rate decision, 17 September 2026
Moneyfacts — average mortgage rates
Robert Shiller, Online Data — long-run stock and bond returns
Atlanta Fed — GDPNow
Topdown Charts — stocks vs bonds analysis
https://substack.com/@chartstorm
Bond and mortgage figures correct at time of recording. Nothing in this video is financial advice.

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► https://www.economicshelp.org was founded in 2006 by Tejvan Pettinger, who studied PPE at Oxford University and teaches economics. He has published several economics books, including:

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20 Comments

@TobotronPrime 1 day ago

The economy is growing and yet this feels worse than 2008

@handlebar4520 1 day ago

No one has any faith in governing systems world wide, it's that simple.

@mavor101 1 day ago (edited)

The smart money knows that the music is stopping.

There is just too much debt in the world, and there is going to be severe pain before/during/after it is discharged, however that happens.

@BigPigFinance 1 day ago

This has been a very long time coming, arguably decades of the developed economies managing the end of the post-ww2 boom by increased govt debt essentially supporting economies which are dependent on: a) govt spending b) more domestic consumption c) the corresponding increase in consumer credit d) cheaper imports at expense of domestic manufacturing. And then there is the demographic squeeze of the dependency ratio.

@rogermanvell4693 1 day ago

The government is a safer bet than Google because it has an endless supply of taxpayers whereas any private company can go bust.

@carrickrichards2457 1 day ago

US 30y Treasuries now offer 5.62% yield. Everyone knows the only way out of every democracy's debt-deficit trajectory is high inflation. That was how post WW2 debt was erased. That means higher yields are to come, making bond prices drop. US needs to sell-refinance nearly $3Tn treasuries/ month, so needs to offer a big incentive to find enough buyers.

@dsfgkasguyrebfv 1 day ago

Government bonds are a ponzi scam. After the 2008 crash, they auto enrol people into private pensions. Those private pensions are buying lots of bonds. Allowing the government to borrow at low rates and fund wars to benefit Israel and US.

I could not understand who on earth would buy long term bonds paying 4% interest when inflation is really much higher.

If you look at the M2 money supply, real inflation has been 6.6% per year for the last 30 years.

@julianshepherd2038 1 day ago

In America the optimists are buy gold and the pessimists are buying guns

@bdorman009 1 day ago

Be greedy when others are fearful. Be fearful when others are greedy.

Bonds looking real cheap right now.

@Pomelu 1 day ago

Quite simple really, the reset is coming during this war and the insiders that got the memo are exiting

@emileevans9747 20 hours ago

Swiss 10 bond yield is 0.6%
UK government 10 bond yield 5.4%

Therefore the UK government is paying ten times the interest that the Swiss government pays to borrow over 10 years.

Bit of an inconvenient fact for British politicians.

@DWbo-r7v 1 day ago

Hormuz is still a 6 million barrel deficit whatever

@Alistair2026 9 hours ago

On-the-run vs off-the-run is a concept that isn't easy to understand at first. Once you do the maths, it makes sense.

@DavidParkinson-e5q 1 day ago

Are investors selling government bonds in material quantities over "normal" levels (i.e. selling of short dated bonds as they were held as cash equivalents) or are subscribers to new issues thinner on the ground?

@jeffreymorris1752 1 day ago

Whatever happened to actual paper U.S. Savings Bonds? Well, they stopped issuing them because they were too simple and everyone understood them. They deleted one of the best known and most successful brands in economic history. Just deleted it. Did tbey ask Congress? Nope. Did they even inform the U.S. citizenry? Oh hell no. Why would they do that?

@niners.own.the.packers 1 day ago (edited)

Value loss occurs if you sell it.

Same as a mortgage. House not worth the loan... live in it. Only a problem if you must sell

@Bharat-c7v7e 1 day ago

Just a week ago, my portfolio was up 45%, I held on, thinking it would keep climbing, but now it’s down 60% because I didn’t sell; seeing others win big with shorts, longs, and options has me ready to finally learn how to trade smart and take control.

@Julian_Wang-pai 1 day ago

Too much money/resources in too few hands and the economy goes into infarction, coronary collapse! HAVEN'T WE BEEN HERE BEFORE?!!

@BigPigFinance 1 day ago

Everything I have read up on about the AI boom points to it being all about money and less about technology, with circular financing and frankly the whole thing being pumped. Red hot? Well, overvalued perhaps. Be tricky if the AI boom goes bang and the bond markets flop at the same time.

@neilus0 1 day ago

When you bought the bonds you were happy with the interest rate and duration. Only selling them early creates a loss. Hang on to them and keep your investment. No sympathy for bond traders