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Strong US economy forces investor rethink on interest rates

Prospect of inflation staying higher for longer and poor summer liquidity drives surge in bond yields
Despite a fall on Friday, yields on benchmark US Treasuries were about 4.23%, 0.27 percentage points higher than at the start of the month

The strength of the US economy and the spectre of persistent price pressures have fuelled a big surge in borrowing costs on both sides of the Atlantic as investors rethink the trajectory for global interest rates.

A global bond sell-off pushed benchmark US 10-year Treasury yields close to their highest level since 2007 this week, while equivalent UK gilt yields hit the highest since 2008 and 10-year French government bonds reached levels not seen since 2012.

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