Kotak Warns of 'Roller Coaster Ride' in Global Interest Rates as Debt Concerns Mount

Veteran banker Uday Kotak has warned of heightened volatility in global interest-rate markets due to rising government debt, widening fiscal deficits, and increasing bond yields. In a social media post, Kotak described potential market conditions as a 'roller coaster ride' if central banks expand their balance sheets to manage debt pressures.

The warning comes amid a significant shift in Japan's 10-year government bond yield, which has crossed the 3% mark for the first time this century. This milestone reflects a major change in Japan's bond market after the Bank of Japan ended its negative interest-rate policy in 2024.

Investors are now assessing Japanese government bonds based on factors like inflation, economic growth, and risk-return considerations rather than relying mainly on central bank support. The US is also experiencing pressure, with long-term Treasury yields staying above 5% for a prolonged period, marking the longest stretch of elevated rates in nearly two decades.