Global Government Borrowing Costs Hit Multi-Decade Peaks
Global government borrowing costs have surged to multi-decade highs, driven by inflation fears, massive national debts, and corporate AI investment spending.
Global government borrowing costs have reached their highest levels in decades, with the 10-year U.S. Treasury yield hitting 5.34 per cent, a peak not seen since 2002. Similar spikes are affecting France, Japan, and Britain, where 30-year borrowing costs touched 6 per cent for the first time since 1998.
The United States Department of the Treasury and other global financial authorities attribute the sell-off to inflation worries linked to rising oil prices and U.S.-Iran tensions. Market anxiety is further fueled by massive national debt loads, including U.S. debt exceeding US$40 trillion. Additionally, a US$220 billion surge in corporate bond issuance from five major hyperscalers to fund artificial intelligence investments has increased overall borrowing demand, pushing yields higher.
In response, the U.S. Treasury has implemented bond buybacks to limit costs. While the European Central Bank possesses tools to prevent disorderly rises in borrowing costs, Bank of France Governor Emmanuel Moulin cautioned that it would be misguided to expect the bank to rescue a sell-off in French bonds. The Institute of International Finance reported that major economies now spend more on interest expenses than on defense, clean energy, or AI.
