Economies thrown into renewed turmoil as AI debt, Iran war and soaring government bond yields fuel alarm
At the height of the summer, optimism prevailed in the world’s financial hubs. Driven by the AI boom, the US stock market pushed to a new all‑time high, as investors believed the multitrillion‑dollar investment surge would outweigh the impact of the Iran conflict.
Now warning lights are flashing red. With fighting in the Middle East escalating and no clear path to peace, financial markets have slipped back into turmoil. A slowdown appears imminent in the AI arms race, while volatile conditions in the government‑bond market are adding to the unease.
In the past week US borrowing costs rose to their highest level since 2007, creating ripple effects for households, businesses and governments worldwide. There are concerns that President Donald Trump’s war efforts could stoke higher inflation. His tax and spending proposals, which push Washington’s debt above $40 trn (£29.9 trn), are also unsettling investors.
As global oil prices climb above $100 a barrel, putting pressure on the bond market, could equities be next in line for a crash?
