September 12, 2026

Too much saving pushed rates down for two decades. The problem was that there was more capital than projects to invest in. That has now changed. Today, there are more projects than capital. Think about what that does to price. When capital is abundant and projects are scarce, projects compete for capital, and they compete by accepting a lower return. When projects are abundant and capital is scarce, capital competes for projects, and it competes by demanding a higher return. The return that clears the market is a higher yield. Take the data center buildout as an example. It is not that the money isn't there. Hyperscalers have raised everything they have asked for. It is that they are paying more for it. Spreads on their longest-dated bonds have widened, and most of the paper issued in 2026 trades wider today than where it priced. Investors are still buying. They are just charging more. Note where the repricing lands. Data centers, power generation, transmission and government deficits are all long-duration claims on savings. So the competition for capital concentrates at the long end of the curve, which is why long rates have moved more than short rates. The bottom line is that we have been through a regime change. From a savings glut to a savings shortage, see chart below. With this backdrop, it is not surprising interest rates are going up.

September 11, 2026

Data from the S&P 500 second quarter earnings season shows that AI adoption keeps broadening: 69% of companies now point to a live deployment, up from 64% last quarter, see the first chart below. But the disclosure thins out fast. Only 29% put a number on a result, 2% report a metric tracked over time, and none break AI value out as its own KPI or P&L line. Where companies do quantify the impact of AI, the evidence skews heavily toward cost, which accounts for 70% of disclosed proof points versus 22% for revenue, see the second chart. Some of that is timing, since efficiency gains land inside existing operations well before new revenue lines take shape. That still leaves investors without a verifiable link between AI capex and the top line. The question is no longer who is deploying AI. It is who can prove the ROI. For more data and discussion, see the AI Value Gap here.

September 10, 2026

Countries with larger pension systems have deeper capital markets, see chart below. The US sits at nearly 475% of GDP in pension and household investment assets, and above 200% of GDP in market capitalization. Germany, France, Italy and Spain are all well below on both measures. What separates them is not just returns, it is the institutional bid. The Netherlands, Denmark and Sweden show what funded pension systems do for capital market depth. Ireland and Italy have now launched auto-enrollment. Germany, Europe's largest economy, is introducing reforms, see also here. Aging societies strengthen the case for creating funded pension schemes. The bottom line is that pension depth and market depth often move together, and most of Europe has plenty of work to do. Pension funds are natural holders of equities, infrastructure, private credit, private equity and real assets. A deeper institutional savings base broadens demand and expands European markets' capacity to finance growth. Written by Huw van Steenis, London