For all the hand-wringing over war-related inflation fears, there are signs that other drivers are having as much a bearing on longer-term borrowing costs.In the US, so-called real yields, which strip out inflation, have had a greater impact, indicating bond investors aren’t just worried about price pressures from the Iran war.Other culprits include signs already large public debt burdens will swell even further, fallout from the AI investment boom and the mounting chance central banks such as the Federal Reserve will raise rather than cut interest rates.The speculation, underscored by a Bloomberg analysis and highlighted by strategists at ING Bank NV, Goldman Sachs Group Inc and Barclays Plc, is that the recent jump in some long-term yields will not fully reverse even if the inflation spurred by costlier oil retreats.That risks keeping market borrowing costs elevated around multiyear highs even after the conflict ends, maintaining pressure on governments and economies.“The argument that duration is selling off globally due to inflation fears is hard to square with market pricing of medium- and long-term inflation risk,” said Jonathan Hill, head of US inflation strategy at Barclays. “Instead, the interaction between rising debt levels, potentially higher neutral rates, and AI could be driving real rates higher.”The so-called neutral rate is the level which neither spurs nor slows the economy.While the surge in oil prices may be capturing headlines, break-even rates that measure the inflation expectations of bond markets haven’t risen as far as overall rates in the US and UK.Hill notes even with the war underway, 10-year breakevens in the US are 50 basis points below where they were in the first half of 2022, when the Fed was jacking up rates. And the so-called 5-year, 5-year breakeven rate, a proxy for market-based measures of medium-term inflation expectations, are around where they were in December, at 2.2%.At Bank of America Corp, economists Claudio Irigoyen and Antonio Gabriel are monitoring shifts in the yield curve to determine what’s moving bond markets. That’s the gap between long- and short-term yields.“In an environment where Fed could potentially be on the table and become a driver of even larger fiscal deficits amid rising debt servicing costs, the long end of the curve becomes more sensitive to what should be primarily a move in short-end rates,” they said.Subtracting inflation-adjusted yields from nominal rates leaves real yields, seen by some in the market as a truer measure of borrowing costs. A Bloomberg analysis shows rising real yields explains most of the move higher in overall yields in the US, while inflation is to be the major influence in Japan and Germany.Such trading means that even if the Strait of Hormuz, a critical chokepoint for global energy flows which has been closed by the war, is eventually opened, long-term rates “could find themselves a tad stranded at elevated levels” as real yields stay high, said Padhraic Garvey, regional head of research for the Americas at ING.He reckons the “entire” break in 10-year US yields beyond 4.5% has come from higher real yields. The US benchmark neared 4.70% on Tuesday before pulling back to 4.56% on Friday.“A reopening of the Strait would cap inflation expectations, but could leave real yields elevated, and if so, then Treasury yields don’t collapse lower as many currently anticipate,” said Garvey.“The bond market is not reacting to one headline,” Mark Malek, chief investment officer at Muriel Siebert & Co wrote in a note to clients. “It is repricing a structural problem that cannot be solved with a press release or diplomatic pause.”Senior US officials said Sunday that the US and Iran were closing in on a deal that would reopen the strait, even as President Donald Trump said he won’t “rush” into an agreement.Reasons to expect yields to stay lofty in the US include Trump’s push to cut taxes, adding to an already large debt burden and subsequent need to sell Treasuries, as well as his ongoing trade war stymieing supply chains.In an interview last week with Bloomberg Television, Jamie Dimon, chief executive officer of JPMorgan Chase & Co, said US interest rates may climb much further, citing concern about government borrowing and demand for the debt.To Phillip Lee, head of real money rate sales at Goldman Sachs, persistent fiscal deficits, more Treasury issuance and concerns over debt sustainability increasingly explain why investors are demanding extra compensation to own long-term debt.“I think rates are going higher,” he said on a Goldman podcast.Having begun the year betting the Fed would cut rates, traders now wager it will have to hike this year, even with Kevin Warsh having become chair.While AI may eventually help ease inflation by spurring productivity, bond traders fret its short-term impact is to fan inflation as tech companies suck up semiconductors and open massive data centers, while also flooding the market with their own debt.Higher economic growth from an AI boom would also likely leave investors favoring equities, leading asset allocators to look for higher yields from bonds to compensate.Hill at Barclays says the neutral rate might have risen, which would also justify higher yields with 5% rates on 10-year Treasuries no longer reflecting a “bargain.”In Japan and Germany, rising break-even rates have accounted for most of the increase in 10-year yields since the start of the war, the data show.While Europe is facing higher gas prices, inflation pressure in Japan mounted even before war broke out. Now, the Bank of Japan reluctance to hike rates is forcing investors to demand more compensation for inflation risks, the analysis suggests.In the UK, Keir Starmer faces mounting challenges to his premiership which could result in more expansive fiscal policy and gilt issuance just four years since the market witnessed a dramatic selloff under then Prime Minister Liz Truss.“You want to take a long-term thesis on it, but you almost have to be tactical trading gilts” just because of the rise in political uncertainty, John Sidawi, a senior portfolio manager at Federated Hermes said in an interview. “There’s always going to be an embedded premium in gilts relative to other developed markets.”

Buy now, pay later (BNPL) has become a practical cash-flow tool for consumers in Qatar rather than a prompt to overspend, PayLater chief executive Dr Devid Jegerson told *Gulf Times, adding that the Eid season has shaped the company’s product strategy around resilience and responsible growth.Both Eid al-Fitr and Eid al-Adha represent the peak moments when families spend most heavily in clothing, gifts, electronics, travel and the home, Jegerson noted, describing the two holidays as “the heartbeat of Qatar's retail calendar”.“That rhythm has shaped commerce here for generations, and what is new is the payment behaviour now layered on top of it,” he said in an exclusive interview.PayLater, Jegerson noted, prepares for these seasonal peaks by ensuring merchants are ready, systems are resilient and the checkout remains seamless when demand concentrates.He emphasised that volume alone is never the objective.“Seasonality tells us how to prepare; it is never a reason to relax the discipline that protects our customers,” the official said.Asked whether BNPL drives over-spending, Jegerson said that the product is designed for households that need to make a sensible purchase and then budget for it predictably over a few months.“Used responsibly, BNPL smooths consumption,” he stressed.He pointed to Eid preparations as an example of where this applies.People still need to prepare for the holiday, replace an appliance or buy a school uniform during uncertain times, Jegerson pointed out, adding that “what they need is a transparent way to manage the timing”.He said the breadth of categories where BNPL is gaining traction in Qatar supports that reading, noting that while electronics and fashion perform strongly, everyday essentials, including groceries and household retail also show healthy adoption.“That tells me something important: in Qatar, BNPL is not being used only for discretionary splurges,” he said. “It is being adopted as a practical, everyday budgeting tool by disciplined consumers managing their cash flow intelligently.”That spread across the whole basket, rather than a concentration in impulse categories, is the kind of adoption PayLater wants to see, Jegerson stated, describing it as evidence of a maturing, financially literate customer base.“The emphasis, always, is on that word 'responsibly',” he added. “The value is never in persuading people to spend beyond their means; it is in giving disciplined consumers a clear, fair tool to manage cash flow.”