IMF warns of disorderly bond yield spike as debt, inflation and AI borrowing mount

The International Monetary Fund warned in its Global Financial Stability Report on Tuesday that sovereign bond yields could rise sharply and disorderly.

It cited rising inflation, high public debt, and AI firms' borrowing, with hyperscalers' share of global investment-grade bond issuance up to 10% from under 1% since 2024.

The fund also flagged leveraged hedge fund Treasury trades as susceptible to a disorderly unwind and urged debt managers to lengthen maturities.