Shafaqna English– Market measures of inflation-adjusted interest rates have reached their highest points in more than ten years across the globe’s largest economies. The primary catalyst behind this phenomenon is the accelerated pace of bond issuance by both AI-centric corporations and sovereign governments, which has effectively pushed up the real cost of capital.
This development, in turn, raises alarms for stock market valuations and threatens to weigh on worldwide economic activity in the period ahead.
The concept of real yields refers to the inflation-adjusted return that investors demand when purchasing sovereign or corporate debt. These yields are widely regarded as a fundamental measure of the true cost of borrowing for both governments and businesses.
Their levels are not set arbitrarily but are instead determined by a complex interplay of economic expectations — particularly forecasts for GDP expansion, projections for official interest rate changes, and the relative balance between the supply of and demand for liquidity in global capital markets.
Source: Reuters