Global borrowing costs hit fresh highs on oil, AI and inflation

Long-term borrowing costs across some of the word's biggest economies hit fresh highs because of concerns over inflation, government debt levels and spending on Artificial Intelligence (AI).

The interest rate on US borrowing over 30 years hit 5.33% on Tuesday, the highest since June 2007, meanwhile UK long-term debt reached 5.85%. There were similar moves in Germany and Japan.

Interest rates on bonds - which are a type of debt - are known as yields and can directly affect the borrowing costs consumers pay on mortgages, car loans and credit cards.

Rising oil prices are main driver behind this recent surge in bond yields, as investors fear inflation could spike again.

If that happens, central banks may choose to raise interest rates to cool inflation.

On Tuesday, a barrel of Brent crude, the global benchmark for oil prices, surpassed $90 following growing tensions over the conflict in the Middle East.

The recent surge came after President Donald Trump threatened to bomb Oman - a US ally - if it "gets in the way" of talks with Iran to reopen the Strait of Hormuz waterway.

The US and Oman have each been negotiating separately with the Iranian government to reopen the key passage which is vital for global oil supply and other trade.