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| Version 1 | Version 2 |
|---|---|
| Global stocks fall on rate fears | Global stocks fall on rate fears |
| (30 minutes later) | |
| Global stock markets have fallen after US government bond yields rose to their highest level in five years, stoking fears of higher borrowing costs. | Global stock markets have fallen after US government bond yields rose to their highest level in five years, stoking fears of higher borrowing costs. |
| With higher bond yields seen as a signal of higher interest rates to come, investors are concerned about the knock-on impact on corporate profits. | With higher bond yields seen as a signal of higher interest rates to come, investors are concerned about the knock-on impact on corporate profits. |
| After the Dow Jones fell 130 points overnight, London's FTSE 100 was down 30 points in Wednesday morning trading. | |
| Japan's Nikkei fell 28 points, while Germany's Dax started down 72 points. | Japan's Nikkei fell 28 points, while Germany's Dax started down 72 points. |
| Discourage takeovers | Discourage takeovers |
| The yield on the benchmark US Treasury 10-year bond rose to 5.27% in New York last night, its highest level in five years. | The yield on the benchmark US Treasury 10-year bond rose to 5.27% in New York last night, its highest level in five years. |
| The rise in bond yields will push up the price of long term borrowing, which in turn will increase the cost of borrowing for the world's big banks and private equity firms. | The rise in bond yields will push up the price of long term borrowing, which in turn will increase the cost of borrowing for the world's big banks and private equity firms. |
| And this will probably then feed through to higher interest rates for mortgage holders, and discourage company takeovers. | And this will probably then feed through to higher interest rates for mortgage holders, and discourage company takeovers. |
| "If those longer-term rates continued to rise, the frenzy of private equity fuelled takeovers could fizzle - because the cost of financing takeovers would exceed the cash flows of the relevant target companies," said BBC Business Editor Robert Peston. | "If those longer-term rates continued to rise, the frenzy of private equity fuelled takeovers could fizzle - because the cost of financing takeovers would exceed the cash flows of the relevant target companies," said BBC Business Editor Robert Peston. |
| He added that the situation was being exacerbated by the fact the Chinese "are switching hundreds of billions of dollars out of bonds and into equity-related investments". | He added that the situation was being exacerbated by the fact the Chinese "are switching hundreds of billions of dollars out of bonds and into equity-related investments". |
| China has more than $1 trillion (£500bn) in foreign exchange reserves, which up until now have been mainly held in US Treasury bonds. | China has more than $1 trillion (£500bn) in foreign exchange reserves, which up until now have been mainly held in US Treasury bonds. |