The US national debt has surpassed $40tn, but Treasury Secretary Scott Bessent insists there is “nothing magic” about the figure, whilst markets appear less relaxed. With 30-year Treasury yields rising above 5% to levels last seen before the global financial crisis, the Treasury has moved to contain the sell-off by increasing purchases of long-dated government bonds. Furthermore, Washington has also taken steps to reassure Japan, one of the largest foreign holders of Treasuries, that it can access dollar liquidity without selling its holdings. These interventions suggest growing concern that rising borrowing costs could become a threat to global financial stability.

There are several forces driving investors away from long-term US debt. Persistent inflation remains a concern as the conflict with Iran keeps energy prices elevated, reducing the appeal of fixed Treasury payments. Meanwhile, the artificial intelligence boom is creating an enormous alternative demand for capital: major technology companies have issued $219bn of debt this year to finance data centres and computing infrastructure, potentially competing with the government for investors' money. However, the deeper concern is fiscal, with the US debt continuing to rise despite strong economic growth, while tax cuts and government spending have not been matched by sufficient revenues or savings.

However, the danger here is that these pressures will begin reinforcing one another. Higher yields increase the government's interest payments, potentially requiring even more borrowing and further testing investor appetite for Treasuries. Alarmingly, the Congressional Budget Office expects federal debt to reach 175% of GDP within 30 years without significant policy changes. At the same time, America's increasingly unpredictable approach to trade and geopolitics risks weakening confidence in the dollar and its government bonds. Bessent may be right that $40tn is not inherently significant, yet the market's reaction suggests the number represents something more important: a growing test of how much debt investors are still willing to finance.

- Muthu Ramanathan

The UK economy is facing an important macroeconomic tradeoff as the recent July inflation report came to light, revealing that inflation rose from 2.6% to 2.9% despite weak underlying economic growth. Higher household energy costs as well as rising global oil prices, as highlighted in our last edition ($93+ per barrel) have caused cost-push inflation, creating a negative supply shock.

As such, the Bank of England faces an important dilemma: does it protect against impending inflation that could spiral through wages and inflation expectations or prioritise economic growth, which has been slow in the UK as of late? With the nature of such energy costs rising, stagflation is a very real possibility which needs appropriate and effective policy as a solution.

Meanwhile, AI is creating a contrasting supply-side shock. Recently, the IMF's chief economist, Silvana Tenreyro, has also warned us that AI's growing implementation in every sector may be inflationary in the short run, before disinflationary gains are seen. This is because investment and consumer spending are likely to rise first before productivity capacity begins to increase, so AI's long-term gains may not be seen before its short-term demand increases are solved.

How are these developments related? Well, it seems that the global economy is increasingly transitioning towards supply-oriented economic policy. Inflation is being less and less defined by excess demand and increasingly more by competing supply-side shocks and structural change. What was originally a trade-off issue is now becoming a problem of stopping both weaker economic growth as well as higher inflation driven by rising costs that policymakers need to address.

- Nithilan Sharrierr

Dangote Petroleum Refinery and Petrochemicals has applied to Nigeria's SEC for a primary listing on the Nigerian Exchange, targeting roughly $5 billion in October 2026 — a figure that would make it the largest equity offering in Africa’s history, dwarfing the previous record set by MTN Nigeria back in 2019. The filing follows a July private placement that raised $2.5 billion by selling a 6% stake at $0.35/500 naira per share, oversubscribed 3.7 times at a $40 billion valuation, with participation from Africa Finance Corporation and several development finance institutions. 

What makes this more than a domestic milestone is its structure. While the primary listing stays on the NGX in naira, six other African exchanges (including the JSE and bourses in Kenya, Rwanda, and Egypt) are pursuing secondary access through depositary receipts rather than direct dual listings. Kenyan pension funds alone could mobilise hundreds of millions of dollars into the offering. 

The real test isn't the raise itself but whether it proves African capital markets can absorb a transaction of this scale without routing it through London or New York. If the NGX listing clears and the cross-exchange depositary structure functions as designed, it becomes a template other African industrial giants can follow rather than defaulting to foreign listings.

The watch points now are straightforward: the timeline for SEC approval, the confirmed float percentage, and whether the dollar-dividend mechanism that drew institutional demand in the private placement survives into the public structure. Any slippage past September would read as execution risk on the most closely watched African deal of the decade.

- Emmanuel Chukwuani

Until next time,

The Long and Short

Markets, Made Sense