Rising Global Bond Yields Pose Biggest Risk, Says World Bank Director

Mishra identified rapidly climbing risk‑free interest rates as the most serious threat to the global financial system. He explained that higher bond yields depress asset valuations, making leveraged investments and mortgage‑backed loans vulnerable. When risk‑free rates rise, the cost of capital increases, potentially forcing borrowers to unwind leveraged positions. While high oil prices, bond‑yield spikes, and geopolitical tensions add pressure, Mishra argued that India’s debt‑to‑GDP ratio remains comparatively low, offering a buffer against external shocks. He cautioned that stability will hinge on either a decline in bond yields or the emergence of new economic risks that force markets to reassess their outlook.