AI-driven surge in bond yields could be next risk for markets and growth

Inflation-adjusted borrowing costs have surged to their highest levels in more than a decade across major economies, driven by increased bond issuance as AI companies and governments ramp up sales. The move raises risks for stock markets and the broader world economy by tightening financial conditions. Market gauges imply a worsening rates backdrop rather than a near-term relief scenario.

Analysis

Inflation-adjusted borrowing costs have surged to their highest levels in more than a decade across major economies, driven by increased bond issuance as AI companies and governments ramp up sales. The move raises risks for stock markets and the broader world economy by tightening financial conditions. Market gauges imply a worsening rates backdrop rather than a near-term relief scenario.