Will no one think of the bondholders?

Weekly Updates

Rising bond yield are causing angst in government circles (and ill-disguised glee in financial media circles, as a new sensation). As with some other areas of economics, the current narrative tends to look at the world with one eye closed. That higher bond yields increase government borrowers’ costs is a concern—but higher bond yields benefit investors.
For more than a decade after the global financial crisis, buyers of government bonds had to accept unfairly low yields. Bond yields were well below what economists would consider a fair representation of the risk-free interest rate.
Some bond buyers did not care. Foreign exchange reserves are often invested without consideration to fundamental fair value. Financial institutions, forced by regulators to buy bonds for “prudential reasons,” knew they were getting a bad deal but had no alternative. But for investors looking for a fair, low-risk income from their investments, the post-global-financial-crisis world was grim. A return to fair yield levels is something to be welcomed.
The rise in government bond yields presents challenges to borrowers, who can no longer benefit from the artificially low level of borrowing. But in economic terms, rising bond yields could be considered good, if it means a return to fair returns for bondholders.