The world's biggest sovereign bond markets are heading for their worst month in years as soaring energy costs fan inflation and the AI boom lifts economic growth, leaving investors positioning for an era where interest rates stay higher for longer. Two-year US Treasury yields have surged almost 60 basis points (bps) in September and are poised for the biggest monthly jump since early 2023. Two-year borrowing costs in France, Germany, Britain and Australia are set for their biggest monthly jumps since March when the Iran war got underway, sparking a new energy shock. Japanese government bond yields are pinned near multi-decade highs.