Global borrowing costs hit fresh highs over oil, AI and inflation concerns
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- US 30-year Treasury yields hit 5.33% on Tuesday — the highest since June 2007 — while UK long-term debt yields reached 5.85%, with similar moves reported in Germany and Japan.
- Brent crude prices surpassed $90 per barrel on Tuesday, with the article attributing the move to Middle East tensions tied to the US-Israel war with Iran.
- President Trump threatened to bomb Oman — a US ally — if it "gets in the way" of negotiations with Iran to reopen the Strait of Hormuz, which has been largely closed for nearly six months.
- Oxford Economics analyst John Canavan named three concurrent pressures on yields: oil-driven inflation risk, elevated government debt levels, and uncertainty over payback from massive AI investments.
- US corporate borrowing is running at a "record pace" in recent weeks, mostly tied to AI and data center buildouts, prompting investors to demand higher yields given uncertain return timelines.
- UK Prime Minister Andy Burnham moved to reassure bond markets by pledging to stick to existing fiscal rules after replacing Keir Starmer as Labour leader this summer.
Why it matters: Higher long-term yields translate directly into pricier mortgages, auto loans, and credit cards for consumers, while Brent's push past $90 raises the risk of broader inflation that could force central banks to weigh rate hikes capable of slowing economic growth.
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