Long-term borrowing costs across major economies have climbed to multi-decade highs as investors demand greater compensation for rising inflation, fiscal deficits and an unprecedented wave of corporate borrowing. The 30-year US Treasury yield reached 5.33% on Tuesday, its highest level since 2007, while German and French 30-year yields rose to their highest levels since 2011 and 2008, respectively. UK 30-year gilt yields reached 5.86%, while Japanese yields approached record highs. The simultaneous rise across markets highlights growing pressure on governments and companies seeking long-term financing, with higher energy prices intensifying these concerns.

Brent crude rose above $90 a barrel as the US-Iran conflict disrupted energy markets, raising fears that inflation could remain elevated for longer. This creates a difficult environment for central banks, as higher inflation limits their ability to reduce interest rates even as weaker economic data points towards slower growth. At the same time, government debt burdens continue to expand, with US federal debt approaching $40tn. Investors are therefore increasingly questioning whether governments can sustain large deficits without pushing borrowing costs substantially higher.

A further source of pressure is the enormous capital required to finance the artificial intelligence boom. Technology companies are increasingly turning to long-dated debt markets to fund data centres and computing infrastructure, contributing to record corporate bond issuance, with Barclays expecting investment-grade issuance to reach $1.9tn in 2026, up from $1.44tn last year. As a result, with governments and corporations now competing for the same pool of capital, investors can demand higher yields.

However, the resulting steepening of yield curves suggests this may be more than a temporary market sell-off: unless inflation, fiscal pressures or borrowing demand ease, higher long-term financing costs could become a defining feature of global markets.

- Muthu Ramanathan

Japan's economy grew just 0.3% in the second quarter, well below economists' expectations. On an annual basis, that comes to 1.1% growth, well short of the 2% forecast. Capital spending by companies fell 1.2% during the quarter and consumer spending also dropped slightly, the first time that has happened in two years. The only thing keeping growth positive was exports, which rose while imports fell.

A weak yen makes Japanese goods cheaper for foreign buyers, thereby boosting export revenue. That can lift the growth number without any company actually building new capacity or hiring more workers. Companies have now cut back on equipment and factory spending for two consecutive quarters. This back-to-back drop shows that businesses are intentionally holding back on expansion.

Household income data adds another layer to this. Real employee compensation rose by close to 1% during the quarter, meaning people are earning more after accounting for inflation. However, consumer spending still slipped into negative territory, suggesting that households are choosing to save the extra income rather than spend it, which runs against the central bank's assumption that higher wages will automatically translate into higher spending.

One of the major reasons for this is that borrowing costs are no longer close to zero, since the Bank of Japan has been raising rates throughout the year. The weak yen raises the cost of imported machine parts, materials and energy needed for domestic factory upgrades.

The next number worth watching is core machinery orders, which track new orders for equipment and machinery and point to spending plans six to nine months ahead. A weak reading would support the view that this capex slowdown is becoming a trend rather than a one-off dip.

- Armaan Kapadia

Gerard Piqué has become a strategic shareholder in the Global Chess League’s FYERS American Gambits, joining a growing list of elite athletes investing in a sport increasingly viewed as a commercial entertainment property. The former Spain and Barcelona defender joins investors including Erling Haaland and former Indian cricketer Ravichandran Ashwin, highlighting the growing appeal of chess beyond its traditional audience. Piqué’s investment comes at a time when the sport is attracting greater attention through franchise leagues, digital content, sponsorships and streaming.

The attraction to chess is partly strategic. This is because athletes are increasingly viewing the board game as a tool for developing concentration, decision-making and the ability to perform under pressure. Haaland, who has also invested in chess, has drawn parallels between the game and elite football, where preparation, timing and recognising decisive moments are essential.

However, the investment opportunity extends beyond the similarities between chess and sport. With almost a billion people estimated to play chess globally, investors see significant potential to turn an established game into a scalable entertainment product. The Global Chess League is attempting to accelerate this transformation through shorter, television-friendly formats designed for digital audiences.

The growing involvement of prominent athletes therefore signals a broader financial shift in how niche sports are valued. Chess has historically had limited commercialisation compared with football or basketball, but franchise ownership creates opportunities to monetise audiences through media rights, sponsorship and digital platforms. Moreover, backing from high-profile investors can also increase visibility and attract further capital, creating a virtuous cycle of growth. Piqué’s investment is consequently more than a celebrity endorsement: it reflects the emergence of chess as an investable sports asset, where global reach and untapped commercial potential could translate into significant long-term value.

- Neev Dave

Until next time,

The Long and Short

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