Bonds built the modern world. Now they’re spooking investors

For the first time in decades, bonds are not boring. The yield on 310-year U.S. bonds breached 5.6% last week — highest since 2002 — while Canada’s is hovering near 4%. That’s a marked departure from the sub-1% yields common throughout the 2010s. The surging yields mean that the cost of borrowing is rising for governments and normal folks alike. Good thing Robin Wigglesworth, editor of the Financial Times’s Alphaville blog, just published a well-timed book on the subject called A Fabulous Debt: The Epic Story of How Bonds Built the Modern World. We asked him to help us understand what’s going on today.

What exactly is so ‘epic’ about bonds?

The bond market is an almost magical technology: it pools small sums from thousands, even millions, of people into gushing rivers of capital. It’s the stock market’s boring brother — older, bigger, more powerful, and vastly more important. All the big projects and wars throughout history needed money, and that money has almost inevitably come from the bond market. 

Give us an example.

My go-to anecdote is that England defeated Napoleon not simply because of its strategic brilliance but because it could fund its military almost infinitely through the great British bond market, while France struggled to borrow because it wasn’t considered creditworthy. Napoleon joked that Britain was a nation of shopkeepers, and he had a point. Those shopkeepers’ savings financed Britain’s victory and helped establish it as one of the world’s first superpowers.

So it all came down to trust, right? 

Exactly. In fact, in a way, bond markets helped nurture democracy around the world. If you were a shopkeeper in the Netherlands in the 1800s, you wanted to lend to countries that were likely to pay you back, and, broadly speaking, those were countries like the U.K. They’d tamed their king, introduced a parliament, and started publishing relatively transparent numbers on their finances. This allowed England to borrow money more cheaply.

Incredible. Let’s fast-forward to the present. Why are yields surging? 

Yields rise whenever investors demand more compensation to hold bonds, often because of larger economic concerns. And one of those concerns now is the size of the U.S.’s US$40-trillion debt. Plus, the U.S. Fed’s new chairman, Kevin Warsh, initially seemed unwilling to raise rates to contain inflation, which spooked investors. He has changed his tune. But until inflation is under control — and the war on Iran isn’t helping — the bond market is going to be jittery. 

Should Canadians be paying attention to U.S. bonds?

For sure. U.S bonds are the global benchmark, so they affect yields everywhere. It’s like we’re all chained to a drunk dragon and along for the ride, whether we like it or not.

Big tech has issued some $320 billion in bonds this year to finance its AI data centres. That’s equal to about 70% of the U.S.’s total debt issuance in 2026. Is this healthy financing or a credit mania?

This is one of the most important questions now. Tech-driven booms are relatively harmless when they’re primarily financed through the stock market. The dot-com bust crashed stocks. But it wasn’t economically devastating. When these booms are driven by debt, they can be much more destructive, as we saw in 2008. That’s what worries me about AI.

This interview, conducted was edited for clarity and concision.

Written By

Claire Porter Robbins

Claire Porter Robbins is a freelance journalist. She founded Btchcoin News, a financial and economics newsletter, and has written for a variety of publications including The Atlantic, the New Yorker, and The Globe and Mail.