Global bond yields are rising at a rapid clip as traders try to adjust to the idea of a world that isn't flush with easy money from central banks anymore.
The move in bonds has been abrupt, taking the U.S. 10-year yield to a five-month high of 1.87 percent by midmorning Thursday, from 1.79 percent the day earlier. The German 10-year bund was yielding 0.17, after being at zero just a few days ago, and the U.K. 10-year gilt was at a pre-Brexit high. Yields were also rising Thursday in Japan, Canada and Brazil, among others.
The immediate catalyst was a better-than-expected preliminary report showing a 0.5 percent increase in the United Kingdom's GDP. But more broadly, that data added to the view that global central bankers may not continue to ease rates and add stimulus at the pace they had been doing, just as the U.S. Fed looks set to raise interest rates.
"This is the rumblings of a bond tantrum. It's not a tantrum yet, but it is the rumblings of one. You could quickly get (10-year yields) to 2.02," said Andrew Brenner, global head of emerging markets, fixed income at National Alliance.
Brenner said the move is the result of many investors being positioned poorly, and he said the correction could stop once the uncertainty surrounding the U.S. election is over. "I think money will come back into the marketplace after the election," he said.