Explainer-What's behind the selloff in world bond markets?

Bond yields set the tone for borrowing costs across economies, from government debt to mortgages to student and car loans. Rising rates make borrowing and spending less attractive and can slow economic growth.

For instance, U.S. 30-year mortgage rates have risen to a one-year high of nearly 6.7% as yields have climbed on 10-year U.S. Treasuries.

Rising yields mean governments face higher costs as they roll over debt. After a borrowing surge and rise in yields, Britain's interest bill of almost 4% of output is now roughly double its pre-pandemic decade average, its fiscal watchdog said in March, and eclipses the defence budget.

Bond yields also ripple through markets. Higher yields theoretically make stocks less attractive, though strong earnings have kept equities buoyant. And heavily leveraged hedge funds, which trade across countless markets, could come under pressure, too.