Core Viewpoint - Major economies are trapped in a "debt addiction," with expanding fiscal policies leading to a prolonged "debt test" [1] Group 1: Political Uncertainty and Debt Concerns - The surge in global long-term bond yields is ignited by specific political and fiscal events in various countries [4] - France's government faces a confidence vote, raising doubts about its fiscal tightening plans, leading to increased market concerns [5][6] - The yield on 30-year French bonds rose by 8 basis points, with the spread between French and German bonds widening from 70 to 77 basis points [7] Group 2: Persistent High Deficits - Persistent high deficits have become a norm rather than an exception in many countries [12] - Historical data indicates that large-scale deficits were once a wartime phenomenon, but now they are common in countries like the UK, France, and the US [13] - France has not achieved a budget surplus since 1974, while Italy's last surplus dates back to 1925 [14][16] - Moody's predicts that the US fiscal deficit will rise to 9% of GDP over the next decade, even without considering the extension of tax cuts from the Trump era [19] Group 3: Structural Issues Behind Debt Addiction - The rise in long-term bond yields is driven by both cyclical and structural factors [21] - Inflation is a key determinant of short-term interest rates, with UK service sector inflation rising from 4.73% to 4.98%, complicating monetary policy [22][23] - The correlation between sovereign bonds and stocks is increasing, diminishing the hedging value of bonds and leading investors to demand higher long-term yields [28] - Even if short-term rates decline due to economic cycles, long-term rates are unlikely to return to previous low levels due to high government debt and rising term premiums [29]