Financial markets around the world are coming under increasing pressure as higher borrowing costs, expensive energy and tighter monetary policy reshape the investment outlook.
Government bond yields have climbed sharply across major economies. In the United States, the 10-year Treasury yield has moved above 5%, while long-term borrowing costs in Britain and other advanced economies have also reached levels not seen for many years.
Higher yields make it more expensive for governments to service debt and can also increase financing costs for businesses and households, including mortgage borrowers.
At the same time, Brent crude has remained above $100 a barrel amid continuing disruption and uncertainty surrounding global energy supplies. The Bank of England has warned that higher oil, gas and refined-product prices are creating a more prolonged negative supply shock for the global economy.
The changing financial environment is also testing the strong enthusiasm that has supported technology and artificial-intelligence stocks. AI investment remains substantial, but the Bank of England says a growing share of AI-related investment is being financed through debt, increasing the financial system's exposure to developments in the sector.
Despite the pressure in bond markets, global equities have so far remained relatively resilient. Reuters reported that major world stock indexes were still close to record levels at the end of the third quarter, although higher yields, oil prices and geopolitical uncertainty are creating new risks for investors.
For governments, investors and households, the combination of expensive borrowing and energy could therefore become an increasingly important factor in economic decisions as 2026 progresses.