Ambrose Evans-Pritchard: The oil shock has mushroomed into a larger bond crisis, Frankrike, Italien, Japan
The Long Bond
Bonds have something called duration. The weighted average time it takes to receive their cash flows.
Stocks are similar, except those flows aren’t known for sure in advance and stocks never mature.
Today’s hottest stocks have very long durations since they pay small or no dividends and dangle distant profits when they’re expected to dominate AI or space or whatever.
Since long bonds have the closest duration to the S&P 500, their rising real yields raise the bar for stocks, all else being equal.
The 30-year bond yield reflect investors’ creeping doubts about the government’s future ability to pay.
It’s unlikely that the U.S. or other developed countries will actually default, but there are other ways to deal with unsustainable borrowings. One is letting inflation quickly erode their value.
It’s possible for governments to kick the can down the road for five or 10 years and hope the next people elected will make tough decisions.
Not for 30 years. Distortions notwithstanding, long bonds are a useful litmus test for financial angst. Keep an eye on them.
Spencer Jakab Wall Street Journal 22 July 2026
https://www.wsj.com/finance/investing/the-long-bond-is-making-people-nervous-5397f8b5
Borrowing costs have reached critical levels across the G7. They are resetting the price of credit for vast swaths of the global financial system.
The effects are cascading through the mortgage industry and pushing a universe of over-indebted companies towards a refinancing crisis.
Stock markets cannot defy this force for long.
Societe Generale says that even if the war ends today, the lagged effects will push oil Brent prices to $125.
“The sequence of tanker transit, discharge, refining, and distribution implies a delay of at least 52 days, meaning end-users do not see relief until late July at best,”
The Iran war has pushed 10-year bond yields in France and Italy to almost 4pc, crossing the danger line where interest costs rise faster than the trend growth rate of nominal GDP.
This is how a vicious budgetary circle begins.
Ambrose Evans-Pritchard Telegraph 19 May 2026
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