Bond yields are exploding on both sides and the signal looks clear.

USA: the ten-year bond touched 5% in recent days, the highest since July 2007. It is driven by expensive oil, inflation fears, and the Fed's rate decision is awaited.

Czech Republic: the Czech ten-year bond is even worse off, around 5.3-5.35%, the highest since November 2022. In August it was still at 4.7%.

Why the long end is rising: the market doesn't just believe in inflation, but mainly in how much new debt governments will have to issue to finance deficits. More bond supply = investors want higher yields to buy them.

Impact on you as investors: Higher yields = more expensive mortgages and corporate loans, but mainly pressure on equity valuations. Most sensitive are growth and tech companies with high P/E, because their value rests on future earnings, which are now discounted at a higher rate. Bonds themselves are becoming a real competitor to stocks - why risk on the stock market for a hard-earned 10% when a risk-free bond offers 4.5-5% without any effort?

We'll see how the Fed decides tomorrow, hopefully they sleep well.