The threat posed by bonds to the global financial system

The worst bear market in a century is unleashing huge strain on parts of the financial system

 A trader works at his desk on the floor of the New York Stock Exchange
(Image credit: Drew Angerer/Getty Images)

In 1994, James Carville, then an aide to President Clinton, made the famous observation that he'd like to be reincarnated as the bond market – because then "you can intimidate everybody". 

Carville's quip is arguably "truer now than ever", said William Pesek on Forbes. With US national debt now topping $33trn, the "bond vigilantes" so feared by the Clinton White House are back – "bidding US bond yields up to their highest levels in nearly two decades", and causing a global "repricing of assets". Higher yields on sovereign bonds are a big worry for indebted governments facing punishing interest payments. 

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