Financial encyclopedia

By the end of October 2025, the yield on the US 10-year Treasury bond rose to approximately 4.1%, marking the official end of the era of low interest rates. 

Ten years ago, the world still relied on borrowing to fuel prosperity; now, interest rates have returned to reality. 

The economy is entering a new normal characterized by "high debt and high interest rates". -
The aftereffects of the era of low interest rates 

During the era of quantitative easing, the cost of capital was extremely low, and borrowing became the main means for countries to maintain economic momentum. 

The government deficit keeps expanding, enterprises are sustaining debts with new debts, families are over-leveraged, and low-interest funds have also driven up housing prices and asset prices. 

Now that interest rates are rising, this system of "borrowing to fuel prosperity" is starting to backfire. 

The accumulation of old debts has turned into pressure, and the balance between economic growth and fiscal stability has begun to waver. -
Stress Tests in the Era of High Interest Rates 

The yield on the 10-year US Treasury bond has remained above 4% for a long time, symbolizing that global funding costs have entered a "re-pricing" phase. 

For the government, the rapid increase in interest payments weakens fiscal flexibility. 

For enterprises, financing difficulties and rising default risks are encountered. 

For families, the dual pressures of mortgage loans and living costs coexist. 

More crucially, this "high-interest-rate environment" is not a short-term phenomenon but a new equilibrium for the next decade. 

The world is entering a prolonged period of debt settlement. -
When high debt combines with high interest rates, the pressure becomes systematic, marking the shift from "able to borrow" to "unable to repay". 

The government has cut infrastructure spending, enterprises have reduced investment, and consumers have decreased their spending. As a result, the momentum of economic growth has gradually slowed down, leading to a structure of "low growth + high costs". 

Some emerging markets have even chosen to "inflate away" their debts, reducing the real value of their debts through currency devaluation. 

This indicates that the world is entering an era of "chronic debt digestion", and the economic pace will slow down comprehensively. 

The "new normal of debt" reminds us that: 

The economy will find it difficult to be reignited by low interest rates and loose policies. 

Investment strategies should focus on cash flow and stable returns. 

Governments, enterprises and individuals all need to relearn the mindset of "living on cash". 

The "settlement of the era of high interest rates" will gradually change the rhythm of the entire global economy in every loan and every interest payment.