Blain’s Morning Porridge May 22nd 2026 – Just how bad could the bond market get?“Ships make no money sitting in port, so build and sail them to ride the storms that will inevitably assail them.”In Bonds there is truth. While government bond yields have risen some 40-50 basis points since the Iran War, and yield curves have steepened, we are not in crisis territory yet. However, the risks of “higher for longer” rates, and sustained inflation have risen. These will impact credit markets and potentially trigger a cascading corporate crisis – leading to all kinds of hell that governments and central banks are now ill-equipped to deal with.Time to talk about the bond market.The Iran inflation threat has led to mounting concern about what rising yields in Treasuries, Gilts and JGBs might herald in terms of recession and a crisis across bonds and credit. (What? You thought they were the same thing? Wrong...) Sovereign bond markets have steepened on the expectation of higher for longer interest rates primarily due to rising inflation expectations, but also due to the perception of escalating political incompetency – and it’s the yield on Bonds that set the risk rate for the whole economy.Never underestimate the probability events and bad politicians will be able to steer us into full blown stagflation! There is no shortage of headlines about what rising debt costs mean for the sustainability of Governments – particularly here in the UK, where Sir Keir Starmer’s hapless government is scared of everything, but thinks about the bond market in abject screaming terror.Relax. It’s not the end of the world as we know it… Yet! It might become so.You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!

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