40-Year Era of Cheap Capital Ends, Interest Rates Predicted to Rise

JPMorgan's macro thesis argues that two forces kept interest rates suppressed for forty years. Fiscal discipline and demographic abundance are no longer present, according to the bank's framework.

The absence of these factors has led JPMorgan to predict a new permanent floor for interest rates at 4-5%. The $100 trillion in global public debt and shrinking workforces across major economies support this prediction.

AI hyperscalers are particularly affected, as they sit on $300 billion in data center debt. Venture capital firms also face challenges due to 2021-vintage valuations.