Why Long-Dated Bonds Are Falling Out of Favor #stockmarket #business #shorts

Market Trends & Borrowing Costs - Borrowing costs are up, reaching levels unseen in decades, especially for long-term bonds, impacting investors and governments globally [1] - Investors are demanding higher compensation for holding long-term bonds due to persistent inflation and significant budget deficits [2] - Yields on 30-year treasuries are nearing 5%, a level last seen in July, while UK 30-year rates have reached levels last seen in 1998 [3] Government Debt & Fiscal Policy - Governments worldwide accumulated substantial cheap debt following the 2008 global financial crisis and further increased borrowing to address COVID-19 lockdowns and related recessions [4] - Increased inflation and interest rates since the pandemic have made such large-scale borrowing unsustainable [5] - Concerns exist that persistently high bond yields and governments' failure to manage their finances could lead to escalating debt servicing costs [5] Structural Forces - Structural factors, including demographics and geopolitical tensions, are contributing to the rise in borrowing costs [2] - The longer the maturity of a bond, the greater the potential for adverse events, leading investors to demand higher compensation [4]