Borrowing costs in major economies have hit their highest levels in nearly two decades. Investors have been shunning government debt and demanding higher returns. They worry that the Iran war could keep oil prices and inflation high. The International Monetary Fund warns that global debt could approach World War Two levels.
"The historical evidence reveals a striking pattern: government bonds have repeatedly generated substantial real losses during these extreme episodes. They have even underperformed equities and real estates which are traditionally regarded as risky assets."
There is one narrow, perilous route by which Rachel Reeves can successfully deliver her 26 November budget, and it runs right through government bond markets. But the current outbreak of Labour infighting driven by a flurry of pugilistic briefings from inside No 10 risks cutting that route off with two weeks still to go before budget day. Before news broke of an abortive leadership challenge, the chancellor had been carefully laying the groundwork for a tough statement, likely to include busting Labour's manifesto pledges
