Prof G Markets · Thursday, September 24, 2026
Howard Marks outlines three primary reasons for the current rise in interest rates: persistent inflation, the US's substantial national debt and fiscal profligacy, and a high demand for capital. He notes that inflation has remained stubbornly above the Fed's 2% target and that the national debt has reached $40 trillion. Marks also points out that various capital uses must compete, driving up yields.
“So, there's lots of different reasons. And, you know, as I said in in the memo, I think the main reasons why rates are going up is because number one, inflation is stubborn and it has stubbornly been above the Fed's 2% target for for, you know, for the last five years.”
“And, you know, simultaneously, uh, you know, the US came out with a number of 40 trillion for its national debt. And there's concern about the impact of the meaning of that profligacy.”
“And, you know, the third factor is, is there's a lot of demand for capital. And so a given use of capital has to compete with all the other uses to attract it. So, you know, yields on investment X go up to make sure that it goes to X rather than Y.”