Fears that US deficit is unsustainable drive yields on Treasury bills and UK gilts to multi-decade highs

The turmoil in global bond markets has intensified amid fears the US deficit is reaching unsustainable levels, helping drive UK long-term borrowing costs to a 28-year high.

The threat of a renewed round of inflation from the persistently high cost of oil has spooked investors, who believe central banks will be forced to raise interest rates in the coming months to prevent price increases from becoming embedded.