AI investment and government deficits are proving insensitive to higher rates, forcing the Fed and ECB to keep tightening until something breaks. We explain why this favours the dollar over gold in the near term, and which triggers, from a tech sell-off to an oil shock, could reverse the trade.

Higher interest rates do not seem to deter governments and AI companies from heavy borrowing. This leads to "crowding out" and forces central banks to raise rates even further. Read our new currency report to find out what this means for the dollar, the euro and the other major currencies.

Long-term interest rates are rising, while governments' interest burdens are crowding out spending on future growth and politics is too divided to step in. Meanwhile, the AI-investment boom is keeping the economy afloat, but it relies heavily on borrowing. In this report, we explain why markets are too optimistic about AI and what this means for the major interest rates, currencies and equity markets.