IMF warns bond yields could see a 'disorderly' spike as debt, inflation risks worsen

The IMF warned that government bond yields could spike in a disorderly way as rising inflation, mounting debt and AI-related borrowing pressure sovereign bond markets. Yields in several advanced economies have reached multidecade highs, driven partly by higher energy costs from the Middle East conflict, and global public debt is near its highest level since World War II. Hyperscalers’ share of global investment-grade bond issuance has risen to 10% from less than 1% since 2024, while hedge funds’ share of U.S. Treasuries rose to about 9% in 2025 from about 4% in 2022, which the IMF says leaves the market susceptible to a disorderly unwind. The fund also flagged “circular” AI financing: 14 disclosed deals since 2023 channeled about $300 billion of equity and $650 billion of debt, in exchange for $1.4 trillion of future revenue commitments.

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