The Intelligence from The Economist View to a killing: bond yields rise and rise
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Jan 14, 2025 
Josh Roberts, a capital markets correspondent, discusses the surge in government bond yields, emphasizing the disparity between economic data and market expectations. He highlights the implications for borrowers amidst this financial uncertainty. Meanwhile, Henry Kerr, an economics editor, dives into the controversial idea of the U.S. purchasing Greenland and its geopolitical ramifications. They also touch on the challenges facing Singapore's beloved hawker centers, which are under threat despite being a cornerstone of the nation’s culinary culture.
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Government Spending and Bonds
- Governments in rich countries often spend more than they collect in taxes, leading to budget deficits.
- They issue bonds (IOUs) to cover the difference, promising investors interest (yield).
Bond Yields and Investor Expectations
- Government bond yields are rising despite central bank interest rate cuts.
- Investor expectations of future interest rates, influenced by factors like inflation and government policy, play a significant role.
Divergence of Expectations and Economic Data
- Expectations diverge from economic data due to inflation concerns and anticipated government policies, particularly those of Donald Trump.
- Policies like stricter immigration, tariffs, and increased defense spending could increase prices.