Government bond yields, which reflect the cost of countries' borrowing, have been rising, leading to predictions of a fiscal crisis. However, some analysis suggests that widely predicted crises rarely unfold as expected.
Factors currently concerning investors include rising inflation, budget deficits, national debt levels, and the potential for a spiral of bond yields. Despite these concerns, oil prices in real terms are noted as being only slightly higher than their average this century, and new supplies of liquefied natural gas are coming on-stream.
Higher energy prices have contributed to inflation, but without a wage-price spiral, which is not evident even in the UK, inflation is expected to drop. Wage pressures are muted in the UK's private sector, and inflation expectations for the coming years remain moderate.
The current level of pessimism in bond markets may be excessive, with predictions that oil and gas prices will decrease, inflation will fall, and real interest rates will subside. UK ten-year gilts yielding over 5% and 30-year gilts yielding nearly 6% are considered good value, though a caveat is noted regarding the historical tendency for sterling devaluation during Labour governments.