Fears for cost of borrowing after US jobs figures trigger global bond market sell-off

Concerns over the government's borrowing costs were revived yesterday after stronger-than-expected US jobs figures triggered volatile conditions in global financial markets.

- Richard Partington

In an accelerating global bond market sell-off, investors warned that Britain was particularly exposed amid growing fears over stubbornly high inflation and higher for longer interest rates.

Almost 700,000 UK homeowners are facing an increase in mortgage costs when their fixed-rate deals end this year.

At the end of a turbulent week in global markets, bond yields rose sharply for governments worldwide, before falling back, after the last jobs report of the Biden administration showed the US labour market grew strongly in December.

The number of new jobs added in the world's largest economy rose to 256,000, up from 227,000 in November, easily beating expectations of a smaller increase.

Investors said the figures signalled both resilience in economic growth and inflationary pressures, reducing the chances of interest rate cuts from the Federal Reserve, the US central bank, amid fears of high inflation becoming entrenched across advanced economies.