The bond markets might feel remote from ordinary life — and inscrutable to all but the City’s brightest minds.
However, Leon Trotsky’s aphorism is just as appropriate here: ‘You may not be interested in war — but war is interested in you.’
The truth is that when the bond markets go through a volatile period — as they are now — every one of us feels the impact.
In Britain, we had a sharp reminder of this only last year when Liz Truss, the 49-day prime minister, launched her disastrous mini-Budget alongside her Chancellor Kwasi Kwarteng by promising huge unfunded tax cuts.
President Joe Biden speaks during an event on the economy, from the South Court Auditorium of the Eisenhower Executive Office Building
All governments finance themselves in large part by issuing bonds — known as ‘gilts’ in the UK — which they sell to investors for a fixed term of perhaps one, five or ten years.
Each bond pays investors a certain rate of annual interest (known as a ‘yield’) until it…