News bulletins feature the stockmark-et's daily movements or the rise and fall of European government-bond yields. But they very rarely mention an important economic measure; the very low level of real interest rates (ie, after allowing for inflation). In October America even managed to issue an inflation-linked bond with a negative real yield. Low real rates have propped up asset markets this year as investors have been forced into riskier assets like equities, corporate bonds and even commodities in search of higher returns. But a new report* from the McKinsey Global Institute argues that real rates are bound to rise in the coming years. That is because an investment boom is taking place in developing countries, which will place a strain on global savings.
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