Markets Feel Pinch as Rates Rise and Oil Hits $100

Global markets are facing significant pressure due to high borrowing costs, rising oil prices, and central bank rate hikes. This has led to a decline in enthusiasm for AI-driven equities and is causing concern for governments, investors, and households.

The French minority government's 2027 budget bill has been presented, but it may result in weeks of wrangling over spending cuts, which could be exacerbated by the upcoming presidential election. France's 10-year bond yield has hit its highest since 2002, trading near 5%, while the country's debt as a share of economic output is at a record high of almost 120%.

Currency markets are breaking out of their summer hibernation, with the dollar set to gain and the euro struggling. The dollar index has risen for three straight weeks and is at its highest in 18 months, driven by surging growth, high US yields, and elevated oil and gas prices.