Federal Reserve officials’ growing confidence in an October interest rate hike is sending bond yields surging, worsening the financial strain on governments already grappling with high debt levels. The sharp rise in borrowing costs threatens to inflate public spending burdens, particularly for nations with significant debt obligations. Economists warn that prolonged high yields could force tighter fiscal policies or deeper budget cuts. Markets are closely watching whether central banks can balance inflation control with the risk of economic slowdown.
Rising yields strain public finances as expectations of Fed rate rise in October jump to about 70%
