Yields on government bonds are reaching historically high levels in 2026, offering investors a return that properly reflects the risks involved. As of October 1, ten-year government bond rates are around 5.3% in the United States, 3.6% in Germany, 5.0% in France, and 3.1% in Japan. These figures are 300 to 500 basis points above their lows from 2020. The increase began in 2022, when central banks worldwide raised interest rates sharply in response to a surge in inflation. Long-term bond rates peaked in the autumn of 2023 before declining slightly, but they have since surpassed those earlier peaks this year. Inflation, while still a concern, has not accelerated significantly in major developed economies. Price increases remain near or slightly above 3%, and forecasts suggest a stabilization or even a gradual decline. Real interest rates—those adjusted for inflation—are now significantly positive. For instance, inflation-linked U.S. bonds currently offer a real yield of nearly 2.7% for ten years, the highest level since the 2008 financial crisis. This return provides investors with a degree of protection against inflation, except in extreme scenarios. However, the financial health of many developed countries is a more pressing concern. Budgetary paths in several nations are not sustainable in the long term, with France currently facing a bond market crisis. While few major countries see their creditworthiness questioned in the short term, the overall budgetary situation has deteriorated. The rise in the term premium—the extra return investors demand for locking up money for longer periods—reflects this challenging but not catastrophic situation. According to the Federal Reserve Bank of San Francisco, the ten-year U.S. bond term premium is now about 1.4%, a level seen frequently in financial history. The Bank for International Settlements also notes that higher yields are largely due to normalization rather than a sharp decline in economic conditions. Bonds are not risk-free, but for the first time in many years, their risks are adequately compensated by returns. However, this shift has implications for stocks. The projected earnings yield of the S&P 500 is around 5%, close to the U.S. ten-year bond rate. This narrows the historical advantage that stocks had over bonds during the era of near-zero interest rates. While stocks are not necessarily doomed to underperform, their earnings yields are inherently uncertain and volatile, unlike the more predictable returns of long-term bonds. As a result, the appeal of stocks is somewhat diminished. After a long period of low returns, government bonds are once again a viable alternative to stocks. This shift could lead to a significant transformation in global savings patterns, with funds previously flowing toward stocks now being partially redirected toward bonds. This reallocation may slow the growth of stock markets, even with optimistic projections for sectors like artificial intelligence. As interest rates normalize, the era of easy returns for lenders has returned.