Global Borrowing Costs Surge as the Era of Cheap Debt Nears Its End

For more than a decade, governments grew accustomed to inexpensive borrowing, but that period may now be coming to a close. Government bond markets are issuing warnings globally, with yields—representing the interest rates governments pay to secure loans—climbing to heights unseen in years and, in certain cases, decades.

Investors are demanding higher risk premiums before lending to governments that are already burdened with heavy debt loads. With inflation remaining stubborn, geopolitical tensions intensifying pressure, and central banks potentially forced to maintain higher interest rates for longer periods, the resulting surge in borrowing costs is also driving up the rates that banks charge companies and homeowners.