The world has a debt of 365.5 trillion dollars! Rising energy prices increase inflation pressures

In addition to the fluctuations in global markets in 2026, countries are also considering how they will pay off their high public debts. Why do bond interest rates continue to rise all over the world? The rise in energy prices due to cold weather threatens the European continent.

WHY ARE BOND INTEREST RATES RISING?

Rising inflation expectations are behind the rapid increases in bond interest rates. Investors who expect inflation rates to rise choose to sell their bonds. Due to the law of supply and demand, the prices of bonds fall. However, in this case, it causes interest rates to rise. Moreover, global economies, which still cannot make progress in combating inflation, cannot give up on high policy rates.

US 10-year bond yields rose to their highest level since 2002 on Thursday. After declining by 6 basis points, it rose slightly on Friday to 5.26 percent. States are issuing more bonds to pay off their growing debts. This situation supports the rise in bond interest rates.

According to Citigroup's estimate, US Treasury Secretary Scott Bessent may reduce 20- and 30-year bond issuance in order to control borrowing costs. In fact, according to the bank's claim, the issuance of 20-year bonds may be terminated altogether.

GLOBAL DEBT BURDEN IS ON THE AGENDA OF IMF AND WORLD BANK

The annual meetings of the International Monetary Fund (IMF) and the World Bank will take place between October 12 and October 18. While risks looming over the Middle East cause energy prices to constantly rise, inflation risks remain hot.

World Bank President Ajay Banga explained that although approximately 20% of the world oil supply was disrupted by the closure of the Strait of Hormuz, the global economy remained more resilient than expected. However, rising diesel and fertilizer prices continue to increase costs. IMF and World Bank officials will discuss the issue during the talks.

According to IMF data, public debt has reached its highest level since the Second World War. The global public debt to national income ratio is expected to exceed 100 to 100 before 2030. Increasing interest rates in developing countries make it difficult to roll over public debts. The phrase "Winter is coming", used by IMF President Georgieva before the meetings, is also noteworthy as it describes the pressure created by energy prices, inflation and high borrowing costs at the same time.