Posthaste: What the global bond meltdown means to you — and your mortgage

financialpost.com:

The selloff in government bonds in recent days is being called the “one of the most violent recalibrations” of the bond market in recent years, and the shock waves are being felt around the world.

The rout has pushed long-term borrowing costs to its highest level in more than a decade, with the yield on 30-year U.S. Treasuries on Oct. 4 breaching five per cent for the first time since 2007. When a bond yield rises, its price falls.

It’s the speed of the selloff that is unnerving, and the volatility is spreading to stocks and corporate bonds.

“These moves are starting to cause worries across all asset classes,” James Wilson, a money manager at Jamieson Coote Bonds Pty in Melbourne, told Bloomberg. “There’s a buyer’s strike at the moment and no one wants to step in front of rising yields, despite getting to quite oversold levels.”

Markets are reckoning with higher-for-longer interest rates. Long-term yields on government bonds have been rising since mid-July, but accelerated after the United States Federal Reserve drove the higher-for-longer message home in September.

Even countries with more dovish central banks have had their bonds affected by the rise in Treasury yields. Swelling government deficits and increased bond supply are compounding concerns.

Yields in Canada are rising as well. Earlier this week, the Government of Canada five-year bond yield jumped to a high of 4.46 per cent before retreating, Steve Huebl for Canadian Mortgage Trends said in an article. Over the past two weeks, yields have risen by more than 30 basis points.

Since bond yields lead fixed-rate mortgage pricing, these rates are also on the rise.

“Fixed-rate [mortgages] are flying,” mortgage analyst Rob McLister said in his MortgageLogic.news