Greater Milwaukee Today | GMToday.com on Nostr: The bond market rally is overlooking a soaring $2 trillion debt problem ========== ...
The bond market rally is overlooking a soaring $2 trillion debt problem
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Governments from the U.S., U.K., eurozone, and Japan will sell a net $2.1 trillion of new bonds to finance their 2024 spending plans, a 7% increase from last year. Public debt across advanced economies has soared to more than 112% of GDP. Each percentage-point increase in a country's debt-to-GDP ratio pushes up market rates by 0.35 percentage point. Bond yields have already increased this year. Analysts argue that it's only a matter of time before concerns about soaring budget deficits resurface. Bond bulls argue that an increase in supply doesn't necessarily have to trigger a drop in price, as demand is unknown. Governments can scale back the sale of longer-term securities and offer more shorter-term debt if demand doesn't keep up with supply. The Treasury is expected to use the T-bill market for a smaller proportion of its funding in 2024. The supply of debt is a driving force in how investors decide which bonds to own. Slowing global growth and higher benchmark interest rates are pushing up debt loads. The World Bank predicts potential global growth to fall to just 2.2% a year through 2030, its lowest level in three decades. The recommendation to clients is to stay away from long-term bonds.
#BondMarket #DebtProblem #GovernmentBonds #BudgetDeficits #Yield #InterestRates
https://www.gmtoday.com/business/the-bond-market-rally-is-overlooking-a-soaring-2-trillion-debt-problem/article_5a56c6bc-af68-11ee-8117-7742c78b3a4d.html
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Governments from the U.S., U.K., eurozone, and Japan will sell a net $2.1 trillion of new bonds to finance their 2024 spending plans, a 7% increase from last year. Public debt across advanced economies has soared to more than 112% of GDP. Each percentage-point increase in a country's debt-to-GDP ratio pushes up market rates by 0.35 percentage point. Bond yields have already increased this year. Analysts argue that it's only a matter of time before concerns about soaring budget deficits resurface. Bond bulls argue that an increase in supply doesn't necessarily have to trigger a drop in price, as demand is unknown. Governments can scale back the sale of longer-term securities and offer more shorter-term debt if demand doesn't keep up with supply. The Treasury is expected to use the T-bill market for a smaller proportion of its funding in 2024. The supply of debt is a driving force in how investors decide which bonds to own. Slowing global growth and higher benchmark interest rates are pushing up debt loads. The World Bank predicts potential global growth to fall to just 2.2% a year through 2030, its lowest level in three decades. The recommendation to clients is to stay away from long-term bonds.
#BondMarket #DebtProblem #GovernmentBonds #BudgetDeficits #Yield #InterestRates
https://www.gmtoday.com/business/the-bond-market-rally-is-overlooking-a-soaring-2-trillion-debt-problem/article_5a56c6bc-af68-11ee-8117-7742c78b3a4d.html