A violent shake-up in bond markets has intensified as fund managers are wrongfooted by a global drop in short-term debt, analysts and investors say.

Stubbornly high inflation around the world and a hawkish response by some central banks has fuelled a rapid rise in short-dated government bond yields. At the same time, concerns about growth prospects in the coming years have kept a lid on long-term bond yields, resulting in a dramatic “flattening” of yield curves.

Short-term bond markets have “experienced unprecedented volatility” this week, said George Saravelos, Deutsche Bank’s global head of currency research. He said a sell-off in Australia’s market was the most severe since 1996, while Canada had been hit with its worst decline since 2009.