According to DeepFlow TechFlow News on May 24, despite widespread concerns about inflation triggered by the war, signs show that other factors are also influencing long-term borrowing costs. In the United States, the so-called ‘real yield’ after adjusting for inflation has a more significant impact, indicating that bond investors are not only worried about price pressures from the Iran conflict. Other drivers include: the already massive public debt burden potentially expanding further, the impact of the artificial intelligence investment boom, and the increasing likelihood that central banks like the Federal Reserve will raise rather than lower interest rates. Strategists at ING Group, Goldman Sachs, and Barclays emphasize a common speculation: part of the recent rise in long-term yields may not fully reverse even if inflation fueled by oil price increases subsides. This means that even if the conflict ends, market borrowing costs might remain near multi-year highs, continuing to exert pressure on governments and economies.
