Bond yields climb as geopolitical tensions test global risk appetite
The Bank for International Settlements found that global risk appetite held firm in September 2026 despite rising bond yields, conflict in the Strait of Hormuz, and fiscal sustainability strains.
Hormuz tensions meet tech valuation doubts
Market volatility increased during the review period as military hostilities in the Strait of Hormuz intensified uncertainty surrounding the outlook for inflation and monetary policy.
Lingering questions regarding the sustainability of government debt burdens compounded pressure on sovereign bond markets, driving benchmark yields higher across major economies.
Macroeconomic headwinds also raised unease over equity valuations, particularly regarding potential overinvestment in the artificial intelligence sector.
This interrupted earlier equity momentum that had characterised the first half of the year.
Despite periodic bouts of turbulence, overall investor risk appetite demonstrated notable resilience.
From private credit to executive pay
The review highlights thematic studies on structural financial shifts.
Researchers examine how private credit funded the digital transition by lending against cash flows and intangibles.
An analysis of bank executive compensation shows that pay deferrals reduce risk-taking only when paired with sound governance, citing lessons from the 2023 banking turmoil.
Further studies detail rapid credit expansion across Africa and the evolving communication strategies central banks use to explain core inflation metrics.
Resilient on paper, fragile in practice
The findings highlight a troubling disconnect between buoyant market sentiment and mounting fiscal vulnerabilities.
By focusing heavily on private credit and compensation mechanisms, the analysis properly targets systemic blind spots.
However, central banks cannot afford to treat investor resilience as an excuse for regulatory complacency.
Source: BIS Quarterly Review, September 2026
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