LONDON (Reuters) - From the United States to Germany and Australia, government borrowing costs on Friday were set to end February with their biggest monthly rises in years as expectations for a post-pandemic ignition of inflation gained a life of their own.
Australia’s 10-year bond yield and Britain’s 30-year yields were set for their biggest monthly jump since the 2009 global financial crisis. Long-dated New Zealand yields were flirting with their biggest monthly surge since 1994.
The move, which began in the U.S. Treasury market at the start of the year on prospects for a huge fiscal boost and economic recovery, has spread globally.
Even after a Friday respite from this week’s brutal drubbing, Australia’s 10-year yield is up 70 basis points in February and New Zealand’s 10-year yield is up almost 77 bps.
Australia’s 10-year bond yield has soared almost 40 bps this week alone to 1.8%, its biggest weekly jump since 2013 .
And as three-year bond yields moved above their 0.1% target, the Reserve Bank of Australia on Friday made an unscheduled offer to buy A$3 billion ($2.35 billion) of three-year bonds, on top of a similar amount on Thursday, to calm markets.
“Given how expensive bonds have been, meaning yields have been depressed, it was expected that when the selloff came it would move at great speed,” said Seema Shah, chief strategist at Principal Global Investors.
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