The global economy is facing a widespread rise in borrowing costs against the backdrop of sell-offs in the global bond market, CNBC reports. The yield on government securities has reached multi-year highs: the yield on 10-year U.S. Treasury bonds has updated the maximum recorded since November 2023, the yield on German government debt has reached a record level since 2011, and British securities have surpassed the maximum figures from 2008.
Current trends are driven by large-scale debt issuance, oil shocks, and expectations of a prolonged tightening of monetary policy by central banks.
The rising cost of loans is putting serious pressure on governments, the corporate sector, and consumers. Experts say that among developed countries, those with large budget deficits and high debt burdens, such as France and Japan, are particularly vulnerable, where the costs of servicing public debt could exceed 25% of government spending by the 2026 financial year.
In the corporate sector, companies with floating-rate loans, the commercial real estate sector, and the technology sector, which is actively raising capital for the development of artificial intelligence infrastructure, are at greater risk.
The rise in interest rates also creates an uneven burden for different groups of the population: low-income households will be the first to feel the weight of mortgage and auto loan payments, while affluent citizens may benefit from the increase in savings yields.
The stock markets are currently showing stability, but expensive borrowing reduces the attractiveness of stocks compared to reliable government securities. Deutsche Bank has calculated that in the coming year, the yield on 10-year Treasury bonds could rise to around 5.5%, before capital losses from falling bond prices exceed investors' coupon income.
On September 2, it was reported that large-scale sell-offs had begun in the global government bond markets. The yield on 10-year U.S. Treasury bonds has stabilized at above 4.8%, the yield on German bonds has risen to 3.375%, and the yield on Japanese assets has exceeded 3.016% for the first time in three decades. The yield on British bonds has reached 5.25%, the highest level since 2008.
