MARKETS & MONEY
The 5% World Is Coming Back
For years, businesses became accustomed to unusually cheap money. Borrowing was inexpensive, investors demanded less from companies, and projects that looked marginal could still make financial sense.
That environment is changing. Long-term government bond yields have moved close to 5% in several major markets, reminding businesses that capital has a price.
The real question:
Would your business still make the same investment decisions if borrowing suddenly became much more expensive?
Higher rates force companies to become more selective. Expansion plans get reviewed. Acquisitions become harder to justify. Cash flow becomes more important than optimistic forecasts.
A useful reset
Expensive capital can actually improve business discipline. Projects have to earn their place instead of being funded simply because money is available.
In a higher-rate world, strong cash generation becomes one of the most valuable competitive advantages a company can have.
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