Fitch rating agency, one of the top three global rating agencies has warned against potential losses as yields rose sharply across the board since last week. After dropping to a fresh low on last Thursday, the yields have been rising since and a sharp spike on the upside yesterday caught global attention and spooked investors. Japan’s 10 year government bond yield declined to -0.29 percent on Thursday and has been rising since. Yesterday, it has spiked to -0.04 percent. It has eased somewhat today and currently trading at -0.08 percent. The story is similar with all the sovereigns. German 10 year was yielding -0.13 percent on Friday but today it is at -0.033 percent. Similarly U.S. 10 year yield has jumped 10 basis points. Even the 10 year yield in the United Kingdom, which has declined almost 100 basis points since the referendum ticked up around 15 basis points.

Fitch has warned that if the yields keep rising and rise to 2011 levels, the sovereign bond investors would be sitting on a $3.8 trillion loss. According to the agency, $11.5 trillion worth of sovereign bonds are yielding in the negative as of July 15th. Many analysts have been warning of the danger for piling into the government bonds at frenzy for quite some time now. Many believe that the extraordinary stimulus from the central banks have led to a bubble in the government bond market. The fear of the end of easing could have caused the spark.