A global index of government bonds touched its highest yield level since 2008.
Governments have borrowed cheaply for most of two decades. Jack Pitcher said that period is over, and that the repricing reaches everything that is priced off government debt rather than stopping at governments themselves.
"So we really are at the highest borrowing costs for governments and then everything else which gets benchmarked to that, that we've had in almost 20 years."
Pitcher covers financial markets for The Wall Street Journal, and the programme brought him on to explain a selloff that moved German, British, Japanese and US government bonds on the same day.
I listened to the full segment so you can skip it.
Here are the 5 takeaways that matter.
👤 Guest: Jack Pitcher, who covers financial markets for The Wall Street Journal
🎙️ Host: Pierre Bienaimé of The Wall Street Journal, presenting the P.M. edition of What's News in place of Alex Ossola
📰 Published: 1 September 2026 on wsj.com (What's News, P.M. edition)
🟢 Spotify | 🟣 Apple Podcasts | 🔗 Show notes | ⏱️ 10 min
Key Takeaways
Governments are paying more to borrow than at any time in almost 20 years A global index of government bonds hit its highest yield level since 2008 Everything benchmarked to government debt reprices with it
Three separate forces are pushing yields the same way at once Inflation expectations, an oil price lifted by the fighting in the Middle East, and fiscal deficits
The Fed is no longer telling the bond market what to expect Kevin Warsh has said he will let the market work out where rates belong from the incoming data
Nobody knows whether the next Fed move is a hike, and that uncertainty is now priced
Equities had shrugged the bond selloff off until they did not The Nasdaq led the losses among the major indexes and fell 1%
1. New US strikes on Iran
Pierre Bienaimé opened the second half of the programme with the military news that set the market up.
The US said it carried out a new wave of strikes on Iranian targets. The military's stated reason was that Iran had tried to attack commercial ships and US service members in the region
Fighting between the two countries picked back up this week, and Bienaimé said the US response follows weeks of Iranian attacks on shipping that tested the military's restraint
In a post on social media, President Trump threatened further strikes if Tehran responded
The market read it through the oil price. Bienaimé said the news of the fighting drove up the price of oil, with Brent crude up 4.6%
2. Yields jump around the world
The move went well beyond the US. Bienaimé said yields on German and UK bonds hit their highest levels in 15 years or more, and that Japan's 10-year government bond traded at its highest point since 1996
In the US, he said the 10-year Treasury yield was hovering at levels rarely seen since the financial crisis
Pitcher put a single number on the global picture. "There's a global index of government bonds that today touch the highest yield level since 2008."
The cost does not stop with governments. "So we really are at the highest borrowing costs for governments and then everything else which gets benchmarked to that, that we've had in almost 20 years."
3. What is driving the selloff
Asked what is behind it, Pitcher gave three drivers and ranked them.
Inflation expectations come first. "Bond yields tend to move in line with inflation expectations."
The Middle East feeds straight into that first driver. "We're also seeing renewed fighting in the Middle East today that's got oil prices going back up and that pressures inflation."
The third is government borrowing itself, and it is not only a US problem. "Aside from that, there's concern about fiscal deficits in the US and other regions of the world and whether governments are going to be able to get a handle on that."
4. Warsh defers to the market
Bienaimé said uncertainty about the Federal Reserve's next move under Chairman Kevin Warsh is also weighing on bonds. Pitcher explained what has changed.
Warsh has stepped back from guiding the market. "Warsh has said he's going to take more of a stance of letting the bond market figure out what rates should be based on the data points coming in."
The cost of that is that nobody knows what comes next, including whether the next move is a rate rise. "And as a result of that, there's less certainty over what the next move will be, whether he's going to hike rates at the September Fed meeting, and that's getting priced into the risk premium here." The risk premium is the extra yield investors demand for holding a bond when they are less sure what happens to rates
5. Stocks and the AI trade
Equity markets had mostly ignored the bond selloff, and then fell anyway. Bienaimé said stocks dropped on the day even though they had largely shrugged the move off until then
The Nasdaq led the losses among the major indexes and dropped 1%
Bienaimé said some investors worry that a further climb in bond yields could mean a large selloff in AI-driven stocks
Bonus Insights
The other two guest segments in this programme are written up separately — Gina Heeb on the stablecoin the big banks are building together, and Ben Fritz on Paramount's promise of 30 movies a year. The programme's other host-read headlines, including the OpenAI answer to Apple's lawsuit and Germany blaming Russia for the Leipzig drones, are carried in the Heeb summary rather than repeated here
The segment carries no forecast. Pitcher was asked what is driving the selloff and what the Fed adds to it, and he answered both without saying where yields go next
Pitcher's bottom line is that yields are rising because inflation expectations, the oil price and government deficits are pushing the same way, and because the Fed chairman has told the bond market to work rates out for itself.
Books & Resources Mentioned
Bond Yields Around the World Soar in Challenge to Government Borrowing (The Journal's story on the selloff this segment walks through)
U.S. and Iran Trade Strikes in Latest Fight for Control of Hormuz (The Journal's report on the new wave of US strikes that lifted the oil price)
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