IMF warns of risk of disorderly surge in bond yields — CNBC

In Bangkok, Thailand, the International Monetary Fund warned of the risk of a sharp and disorderly increase in government bond yields. The IMF cited rising public debt, a resurgence of inflation, and active borrowing by companies linked to artificial intelligence as sources of pressure on the market, CNBC reports.

Debt and inflation intensify risks

In its new Global Financial Stability Report, the fund said that risks in the sovereign bond market have worsened. The large volume of debt and governments’ need to regularly refinance their obligations make the market more vulnerable to fiscal and inflation shocks.

Government bond yields in a number of advanced economies have already risen to highs not seen in several decades. Among the factors, the IMF cited higher energy prices due to the conflict in the Middle East and expectations of tighter monetary policy by central banks in response to inflation.

According to the fund, a sharp rise in yields could have serious consequences because of the key role sovereign bonds play in the financial system. It could reduce asset values through higher discount rates, including those of AI-related assets, and also lower the value of government securities used as collateral.

More current news is available on the UA.News Telegram channel Telegram.

Competition for capital and hedge fund positions

The IMF also drew attention to the rapid growth in debt borrowing by companies in the artificial intelligence sector. The share of hyperscalers in global investment-grade bond issuance increased from less than 1% in 2024 to 10%.

Such issues, a significant portion of which have longer maturities, compete with government bonds for investors’ funds. At the same time, the IMF noted that this is not necessarily the main reason for rising yields.

The fund named hedge funds’ leverage in trading U.S. Treasury securities as a separate source of vulnerability. The share of such funds in the U.S. government bond market rose to about 9% in 2025 from around 4% in 2022. Although some positions have already been closed without noticeable pressure on the repo market, remaining leverage could trigger a disorderly unwinding of positions.

The IMF said that liquidity indicators in the United States, Europe, and the United Kingdom currently remain stable, while market functioning remains orderly. At the same time, the fund urged public debt managers to extend borrowing maturities because of refinancing risks.