Why are rising bond yields spurring alarm? And what do they mean for you?

Consumers could be facing higher borrowing costs for longer as bond markets are once again signalling rising economic risk to the finance and investing community amid the Iran war, rising government debt and an escalating trade war. A bond is essentially a loan that governments and companies use to borrow money from the general public, and in return for providing funding, those that purchase bonds expect to earn interest.The yield on the 10-year U.S. government bond increased to about 4.9 per cent as of publication — the highest since 2023, an increase of 0.8 percentage points since the start of September. This also comes after the 30-year bond yield spiked over five per cent in July, the highest since 2007.Meanwhile, Canada’s 10-year government bond yield was at about 3.9 per cent, the highest in nearly two years, with most of the spike happening at the start of the month. This was at the same time that Canada’s retaliatory tariffs on U.S. goods took effect, and raised inflation risks. Story continues below advertisement Bond yields tend to fluctuate for a variety of reasons, but a sudden sharp rise in bond yields can signal that investors are concerned about inflation, government...