Climate change and corruption are also driving up interest rates
Rising global interest rates are being driven by high government spending, AI investment, and external factors like climate change and corruption. The article highlights the strain on bond markets as the US and Australian governments manage significant debt levels.
Why it matters
Understanding the drivers of interest rates is crucial for global economic stability and impacts mortgage costs and government fiscal policy.
This year looks like being a double whammy: the most brutal El Niño since 1983 on top of the hottest year on record. ( AAP: Lukas Coch )
Link copied Share Share article As Paul Keating would say, the pet shop galahs are talking about the reason long-term interest rates are surging: the competing demands for money from big-spending governments and AI companies.
All other borrowers are getting trampled as the two bond-issuing elephants compete for cash.
But there are two other things the galahs should consider: corruption and the weather.
I'll get onto those in a minute, but first, let's talk about elephants — and the bond vigilantes, who flexed their muscles last week.
As the US government's debt mountain hit $US40 trillion ($56 trillion) on Tuesday, the bond market started charging 5.3 per cent for its 30-year money, the highest since 2007.
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