Global bond-fire rages as investors fret about inflation
Investors around the world are selling off government bonds amid concerns about rising inflation and unsustainable spending by some large economies. The yield on 10-year bonds issued by Japan, for example, has reached its highest level in 30 years as Prime Minister Sanae Takaichi pushes a new debt-fueled spending amid rising inflation. UK bonds have also soared amid inflation concerns. Refresher: A bond’s yield, expressed as a percentage of its current market price, gets higher when its market value falls. Investors sell bonds when they’re worried that a government can’t manage its debt or spending, or when they believe the central bank will raise interest rates again, meaning that new bonds will pay higher interest rates than existing ones. With the war in Iran continuing to push up energy and food prices, investors expect major central banks to raise rates again soon.
Israel racks up friends in Latin America
On Tuesday, Israel and Colombia scrapped visa requirements for each other’s tourists. It’s the latest move by Colombia’s new rightwing president Abelardo de la Espriella to build ties with the Jewish state. Last week he recognized Israel’s disputed sovereignty over the Golan Heights. This is all a big change: under his left-wing predecessor Gustavo Petro, Bogotá slashed ties with Israel over its military action in Gaza. But it reflects a bigger trend: Israel’s widening inroads with the (re)ascendant Latin American right — the rightwing leaders of Argentina, Chile, Bolivia, Honduras, and El Salvador are all friends of Israel. Israel’s global isolation may be growing, and it remains unpopular among Latin Americans broadly. But right-leaning Latin Americans specifically hold the country in high esteem, either out of admiration for what they see as Israel’s strong security policies, or because of Israel’s legacy of support for the Latin American right during the Cold War.
Brazil’s presidential candidates agree on one thing: data centers
While data centers have become a contentious topic in the US ahead of the midterms, Brazil’s presidential frontrunners are embracing them. Both left-wing incumbent Luiz Inácio Lula da Silva and right-wing challenger Flávio Bolsonaro have made attracting new data center investment part of their plans to boost Latin America’s largest economy. Lula has emphasized data sovereignty and foreign investment, while Bolsonaro is pushing for massive tax breaks on imported computer chips to attract international investors. Brazil has one key advantage: an abundant supply of renewable energy, which accounts for more than 88% of its electricity, making it an attractive market for the energy-intensive industry. The push has faced some backlash, particularly from Indigenous groups who are worried about the environmental impact, but nothing like the opposition seen in the US, where 71% of Americans oppose data center construction in their area.
