Global Financial Markets

Modern technology and cheap imports from emerging markets are causing a split in the West: a small group that profits from rising asset prices, and a majority whose purchasing power is falling behind. That anger is now translating into a strong rise of populist parties, leaving governments ineffectual. In this report we show how this divide emerged and what the consequences are for the key interest rates and currencies.

Higher government debt is becoming a problem in more and more countries, and the markets are now sending a clear signal about it: long-term interest rates are rising. Those rates actually need to come down, because with today's mountains of debt, refinancing at higher levels only makes the situation more precarious. In this report we explain how that could be achieved and what this means for the key interest rate, currency, and equity markets.

The stock markets and the economy have been running on credit: companies are borrowing heavily to invest in AI, while investors increasingly buy shares with borrowed money, driving prices even higher. The resulting rise in share values then serves as collateral for loans used throughout the economy. As long as oil prices and inflation keep rising and central banks are forced to raise interest rates, this self-reinforcing mechanism becomes increasingly vulnerable, at a time when monetary and fiscal policy have little room left to intervene.