Catch-up: AI Has Changed Finance Interviews. Read This To Know If You've Adapted | The 1-Minute Interview Test | Commercial Awareness Update: August 3rd 2026 | Deep Dive: How Corporate Bond Markets Actually Work
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Three stories from the last week that connect in ways worth understanding properly.
Here's what we're covering:
The world's bond market is selling off, and UK borrowing costs just hit their highest level since the financial crisis
Anthropic just signed a $35 billion cloud deal, and it shows where the AI arms race is heading next
Shein is going public at a $26.5 billion valuation, roughly one-third of what it was once worth
Let's get into it.
1. The World's Bond Market Is Selling Off
Something important is happening in government bond markets.
On Wednesday, the yield on the UK's 10-year government bond climbed above 5%, reaching its highest level since the global financial crisis.
But this isn't just a UK problem.
US 10-year Treasury yields have been approaching 5%. German and French borrowing costs have risen. And Japan's 10-year government bond yield just touched 3% for the first time since 1996.
When bond markets in the US, UK, Europe and Japan are all moving in the same direction, it's worth paying attention.
Here's what's actually happening, because the mechanism matters more than the headline.
Remember the fundamental relationship:
Bond prices fall → bond yields rise.
Imagine the UK government issues a £100 bond paying £4 per year.
At £100, that's effectively a 4% yield.
But imagine investors become worried about inflation and decide 4% isn't enough compensation for lending the government money for ten years.
They start selling.
If the price of that existing bond falls to £80, the same £4 payment now represents a 5% yield.
That's essentially what we're seeing across global bond markets.
The obvious question is: why are investors suddenly demanding more?
There are two big reasons.
The first is inflation.
Renewed fighting between the US and Iran sent Brent crude above $94 per barrel this week. Higher oil prices increase transportation, manufacturing and energy costs throughout the economy. Eurozone inflation has already climbed back above 3% in August, strengthening expectations that the European Central Bank may need to raise interest rates again.
The second is government debt.
Investors are increasingly asking how much debt governments can continue issuing before buyers demand significantly higher returns to absorb it.
The US is approaching $40 trillion of government debt. The UK faces its own fiscal pressures. France, Germany and Japan are all dealing with different versions of the same problem.
More bonds being issued means more supply.
More supply, all else equal, means governments may need to offer investors higher yields to persuade them to keep buying.
This is where the story becomes much bigger than government bonds.
Government bond yields are effectively the foundation on top of which huge parts of finance are priced.
Take mortgages.
A bank deciding what interest rate to charge someone for a 30-year mortgage doesn't simply look at the central bank's overnight interest rate. It looks at longer-term bond yields and asks what return it could earn elsewhere.
Take company valuations.
In a DCF, you discount a company's future cash flows back to today.
If the risk-free rate rises, the discount rate generally rises too.
Discount rate ↑ = Present value of future cash flows ↓
That means a company can produce exactly the same expected future cash flows and theoretically become worth less simply because government bond yields have increased.
And then there's M&A.
A private equity firm considering a £5 billion leveraged buyout may fund a large proportion of that purchase using debt.
If borrowing costs increase from 5% to 8%, the economics of the entire transaction can change.
That's why what's happening in bond markets right now matters whether you're applying to Investment Banking, Asset Management, Sales & Trading, Private Equity or Wealth Management.
It's not really a story about bonds.
It's a story about the price of money.
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2. Anthropic Just Signed a $35 Billion Cloud Deal
$35 billion.
That's the value of the cloud-computing agreement Anthropic has reportedly signed with Lambda, an Nvidia-backed cloud provider, for access to computing capacity at a Texas data centre.
To put that number into perspective, Anthropic isn't buying another company.
It isn't acquiring a semiconductor manufacturer.
It's effectively committing tens of billions of dollars for access to the infrastructure required to train and run AI models.
And that tells you something important about where the AI boom is heading.
For the last few years, the easiest way to understand the AI trade was:
More AI → more GPUs → more Nvidia revenue.
That remains important.
But the next stage is much broader.
Those GPUs need somewhere to live.
They need data centres.
Those data centres need electricity.
The chips produce enormous amounts of heat, so they need sophisticated cooling systems.
They need networking equipment to move enormous quantities of data between thousands of processors.
And they need transformers, backup power, land, construction and connections to electricity grids.
In other words:
The AI boom is becoming an infrastructure boom.
There's a useful analogy here.
During a gold rush, everyone focuses on the people looking for gold.
But some of the most reliable businesses are the companies selling the picks, shovels and equipment that every miner needs.
The same principle is increasingly applicable to AI.
You don't necessarily need to predict whether OpenAI, Anthropic, Google or Meta ultimately builds the best model.
If all four continue spending enormous amounts of money competing with one another, the infrastructure providers can potentially benefit regardless of who wins.
And the numbers involved are becoming extraordinary.
Anthropic's $35 billion Lambda agreement follows enormous capital expenditure commitments across the technology industry as companies race to secure computing capacity.
It also creates an interesting financing question.
Technology companies historically generated so much cash that they could fund much of their expansion internally.
AI is changing the scale of those requirements.
Building hundreds of billions of dollars of infrastructure means increasingly asking:
Where does all the capital come from?
Some comes from operating cash flow.
Some comes from equity investors.
Some comes from private capital.
And increasingly, some comes from debt markets.
That means the AI boom is no longer simply a technology story.
It's becoming a capital markets story.
Banks can potentially benefit from arranging debt.
Infrastructure investors can finance data centres and power projects.
Utilities can benefit from rising electricity demand.
Cooling and electrical equipment companies can benefit from the physical buildout.
Private credit funds can finance projects that traditional banks may not want sitting on their balance sheets.
And here's where this connects to Story 1.
If the global cost of borrowing is simultaneously increasing because bond yields are rising, financing this enormous AI infrastructure buildout becomes more expensive.
AI companies want more capital at exactly the moment the price of capital is rising.
That's a tension worth watching.
For interviews, don't just say:
"I'm interested in AI because companies are spending lots of money on data centres."
A stronger observation is:
"I'm interested in how the AI investment cycle is moving beyond semiconductor companies into the physical and financial infrastructure required to support it. Anthropic's $35 billion cloud agreement with Lambda illustrates the extraordinary capital requirements involved, which creates opportunities across power, cooling, data centres and capital markets."
That's a commercial answer rather than a technological one.
3. Shein Is Going Public at Roughly One-Third of Its Former Valuation
Shein is finally going public.
The fast-fashion company is expected to raise around $1.7 billion through its Hong Kong IPO, valuing the business at approximately $26.5 billion.
That's still an enormous company.
But the more interesting number is what Shein used to be worth.
In a private funding round in 2022, Shein was valued at around $100 billion.
So a company once valued alongside some of the world's largest technology businesses is now entering public markets at roughly one-quarter of that peak valuation.
That makes this a useful lesson in how private and public market valuations actually work.
When a private company raises money, its valuation is established through negotiations between the company and a relatively small group of investors.
Imagine an investor agrees to buy 5% of a company for $5 billion.
That transaction implies the entire company is worth $100 billion.
But importantly, only 5% of the business actually changed hands at that price.
An IPO is different.
Now you're asking thousands of public-market investors to buy shares and continuously decide what those shares are worth.
Those investors compare the company against publicly listed competitors.
They examine growth.
Profit margins.
Cash generation.
Regulatory risk.
Interest rates.
And perhaps most importantly:
What return could I earn somewhere else?
Shein's valuation has also been complicated by regulatory scrutiny around its supply chain, tariffs and its attempts to find a listing venue.
The company previously explored London and New York before ultimately pursuing Hong Kong.
But there's also a broader valuation lesson here.
Shein's $100 billion valuation came in 2022, after years of exceptionally cheap money had pushed valuations across private technology and growth markets higher.
When interest rates rise, investors generally become less willing to pay enormous multiples for future growth.
Why?
Go back to Story 1.
Higher risk-free rates → higher discount rates → lower present values.
A business doesn't necessarily need to become dramatically worse for its valuation to fall.
The financial environment around it can change.
That's exactly why comparing today's valuation with a company's previous funding round without understanding the macroeconomic backdrop can be misleading.
There's another interesting lesson here for anyone interested in Investment Banking.
An IPO isn't simply about getting the highest possible valuation.
If bankers price the shares too aggressively and the stock collapses immediately after listing, investors are unhappy and the deal can be viewed as poorly executed.
Price it too cheaply and the company has effectively left money on the table.
The job is finding a price where the company can raise the capital it wants while leaving enough demand for the shares to trade successfully after listing.
Shein's IPO therefore gives us a live example of one of the most fundamental questions in Equity Capital Markets:
What is a company actually worth?
And as Shein demonstrates, the answer can change enormously depending on when — and where — you ask the question.
Final Thoughts
Three stories this week, but they're really about one thing:
the cost and allocation of capital.
Governments need capital.
They're issuing enormous quantities of bonds, and investors are demanding higher returns to provide it.
AI companies need capital.
Anthropic and its competitors are committing tens of billions of dollars to the infrastructure required to build increasingly powerful models.
Companies entering public markets need capital.
Shein is asking investors to fund the next stage of its growth — but those investors are only willing to value the company at a fraction of what private investors once did.
And underneath all three sits the same variable:
interest rates.
When the risk-free return available from government bonds increases, everything else has to compete with it.
A private equity deal has to generate a better return.
A technology company's future cash flows become less valuable today.
An IPO investor becomes less willing to pay an enormous valuation multiple.
An AI company borrowing billions to build infrastructure pays more to finance it.
That's why understanding bond markets is so useful even if you never intend to work in fixed income.
They influence the price of almost everything else.
Most candidates will walk into interviews knowing that oil prices rose, Anthropic signed a big AI deal and Shein launched an IPO.
Your job is to understand why those stories are connected.
That's commercial awareness.
That’s all for now. Have a good week ahead!
Afzal
Ps. Whenever you’re ready:
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