Long-term borrowing prices in some of the world’s largest economies have reached new highs due to fears about inflation, government debt levels, and spending on artificial intelligence (AI). On Tuesday, the interest rate on US borrowing over 30 years rose to 5.33%, the most since June 2007, while UK long-term debt reached 5.85%. Similar moves occurred in Germany and Japan.
Bond interest rates, a sort of debt, are known as yields, and they can have a direct impact on the borrowing prices that customers pay for mortgages, car loans, and credit cards. Rising oil prices are the primary driver of the recent increase in bond yields, as investors fear inflation will jump again.
If this occurs, central banks may decide to hike interest rates to control inflation. A barrel of Brent crude, the global standard for oil prices, reached $90 on Tuesday as concerns over the Middle East war rose. The recent rise followed President Donald Trump’s threat to strike Oman, a US ally, if it “gets in the way” of discussions with Iran to reopen the Strait of Hormuz.
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