Interest rates on government bonds from the US and Europe have risen sharply in recent days. The yield on 10-year Dutch government bonds rose to nearly 3.3 percent. “I feel it’s an overreaction,” said Steven Brockmann, professor of international economics at the University of Groningen.

On the back of increased interest rates on government bonds, there are doubts about further inflation. That has also been the main reason for the decline in stock markets for quite some time. “Investors were shocked when the Fed said that interest rates would remain high for a while,” explains Brackman.

‘Investors are suddenly waking up’

Investors want to compensate for risk and high inflation, and they’re now suddenly starting to respond. Brackman thinks that’s understandable, but he says it’s ‘fantastic’ that people are now waking up to the possibility. After all, central banks are raising interest rates and warning of high inflation. ‘It’s as if investors are suddenly waking up and thinking: yes, inflation, that’s really annoying. I have a feeling that is also an overreaction.’

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Southern European Member States

Rising bond yields are particularly bad news for countries with large government debts, such as southern European EU member states such as Spain, Italy and Greece. These huge government loans have to be refinanced every time. Then they see higher interest rates, which is annoying. These countries will suffer more than countries like the Netherlands and Germany.’

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