US bonds have suffered their worst monthly rout since Trump was elected in 2016 – and it’s rattling stock market bulls

US bonds have suffered their worst monthly rout since Trump was elected in 2016 – and it’s rattling stock market bulls

US government bonds were on track for their worst monthly rout since Donald Trump was elected in November 2016 on Friday, sending shockwaves through stock markets that have become accustomed to ultra-low yields.

The yield on the benchmark 10-year Treasury note had risen around 41 basis points (0.41 percentage points) as of Friday after investors dumped bonds at the fastest rate in years. Bond yields rise as prices fall.

It was the biggest monthly jump in borrowing costs since November 2016, when Donald Trump's shock victory in the presidential election rattled investors.

The rise has sparked a nervous bout of selling in the stock markets. Shares soared in 2020 thanks in large part to record-low bond yields and hugely supportive monetary policy from central banks.

Bond yields have jumped this month because investors expect strong growth in 2021 and rising inflation thanks to huge amounts of stimulus and the rollout of coronavirus vaccines.

The key 10-year yield broke above 1.5%, a level not seen since before the coronavirus pandemic, on Thursday. It was down 5 basis points to 1.475% at 8 a.m. ET on Friday.

Investors have demanded higher returns on bonds to account for inflation, which would erode their returns.

But some also think stronger growth