By Australian Financial Review
Publication Date: 2025-12-04 23:04:00
Kerry Craig, global market strategist at JP Morgan Asset Management.
According to Craig, this shift has implications for inflation and financing costs in the coming decade. “You can think of this increase in debt as something that would increase the inflation outlook and inflation concerns or potential inflation expectations,” he says. This dynamic is affecting government bond markets, where he expects investors will demand higher compensation for holding long-dated assets. “The best example of this is a steeper yield curve,” he says.
The investment side of this spending is also important. Craig says if public investment successfully increases productivity, particularly where it intersects with technology and AI, it can act as a counterweight to inflation as more efficient companies and sectors expand. “If you get enough of that productivity because you have more productive employees, you reduce costs,” he says. The result is a different composition…
