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Global bond yields hit 2008 highs, raising stakes for big borrowers

reuters.com

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Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#21

Post by huurtehoog »

method_capital wrote: post #7
tananaev wrote: post #2

Finally some evidence that the system is working. Most countries are borrowing like there's no tomorrow, so obviously rates should go up to compensate the risk of not paying back.

Working is an interesting term (which I agree with btw) because place like Japan with debt at 200%+ of gdp, rates rising are going to annihilate spending in other important areas. Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Japan is closer to 130% debt-to-gdp. The 200% number is based on gross debt and ignores some other mitigating factors for shock value.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#22

Post by llm_nerd »

whatever1 wrote: post #10
tananaev wrote: post #2

Finally some evidence that the system is working. Most countries are borrowing like there's no tomorrow, so obviously rates should go up to compensate the risk of not paying back.

There is 0 risk to getting repaid from the US. We will print for the lenders the exact amount they are promised. Promises kept. All is good

I feel like there is an inside joke here, so I apologize if I am being a bit spectrum-y taking it at face value.

Every sovereign can print money and repay lenders, but doing so cause an inflationary cycle. When it looks like that is inevitable, borrowing rates start spiralling, so you have to print more money, and soon you are Zimbabwe.

Like the US is catastrophically indebted -- both parties have been negligent on this, though one party has been much, much worse than the other -- and right now there's a certain defeated malaise about 40T in debt. The last time bond rates were this high the country had only $6T in debt, and even that was considered a catastrophic level, and bond rate trends are...not looking good for those want government funds leftover after servicing the debt.

"Oh but we'll just grow the economy..."

The debt has grown by 6.5x, and the GDP has grown by 2.8x since 2002. The math just isn't mathing. And remember that bond prices were historically low, and if there was ever a time to pay down the debt....

Nope, $2T deficit, "hide in the ballroom bunker and hold the world hostage with the nuclear launch button" projects, and now a hilarious $1.3T bribe to voters. Utterly busted. It is astonishing that it took this long for the world's lenders to chuckle and say nah.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#23

Post by willy_k »

bradleykingz wrote: post #17
lordnacho wrote: post #8

Earlier quoted context omitted.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly? Who could you vote for, in any democracy, that would fit this? Also, how many voters would have the wherewithal to identify such a person?

conservatives?

Response to sister comment: conservatism, and the groups that claim to support it, are separate. Same with liberals, and socialists, and the Democrat Party.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#24

Post by epistasis »

toomuchtodo wrote: post #14
epistasis wrote: post #12

Earlier quoted context omitted.

If you loan the person that prints dollars their own dollars back, there's really zero risk of not getting paid back because they can always print dollars and pay you back. The risk is inflation, same as any currency out there. I take that back there is a risk they decide to burn trust as someone who doesn't honor deals, which is a new risk that didn't really exist at the nation state level a generation ago...

The debtor inflating the debt away is a soft default, even if not a mechanical "true" default of not making a payment. Yields will rise and reallocation will occur to hedge against this inflation via debasement risk, as investors will manage against inflation adjusted real return versus other investment opportunities.

Well just as bad for international lenders as inflation is the devaluation [1] that Trump intentionally caused. We have the worst deficits ever, zero appetite for even acknowledging that the record deficits exist, and only massive plans for double digit percentage increases in the deficit on the tab (e.g. increasing military spending to $1.5T from $1T/year)

It was a mad strategy to both cause more inflation with overspending and devalue the dollar! The traditional route for nation state debt management is to grow your economy to make the debt smaller, not make your currency worth less while contracting the economy by deporting a huge chunk of your workers.

[1] https://www.morganstanley.com/insights/articles/us-dollar-de... 2025 article, in 2026 this has been lessened due to the inflation

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#25

Post by huurtehoog »

skybrian wrote: post #19

They have different kinds of risk, but do AI investments and bonds compete for investors?

Yes there's only so much credit on offer and the rising yields precisely when corporate debt is skyrocketing to finance massive data center expansion would indicate that that is indeed a factor.

Op-eds claiming the opposite because "trust me bro" would also make me inclined towards the "data center build out for AI factors in for rising yields in sovereign debt"

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#26

Post by toomuchtodo »

epistasis wrote: post #24
toomuchtodo wrote: post #14

Earlier quoted context omitted.

The debtor inflating the debt away is a soft default, even if not a mechanical "true" default of not making a payment. Yields will rise and reallocation will occur to hedge against this inflation via debasement risk, as investors will manage against inflation adjusted real return versus other investment opportunities.

Well just as bad for international lenders as inflation is the devaluation [1] that Trump intentionally caused. We have the worst deficits ever, zero appetite for even acknowledging that the record deficits exist, and only massive plans for double digit percentage increases in the deficit on the tab (e.g. increasing military spending to $1.5T from $1T/year) It was a mad strategy to both cause more inflation with over…

There is no way to grow the US economy due to structural demographics except immigration levels the US electorate is unwilling to accept. We have long ago exceeded the debt we could accumulate based on the future growth curve inherent to the prime working age cohort.

The credit card of young workers and a growing population ("demographic dividend" in demographics parlance) has hit its limit to spend against, broadly speaking. You can either pay down the sovereign debt with higher taxes, default on it, or inflate it away. Growth is over, growing out of the debt will be impossible.

Terra Incognita: The Economics of a Shrinking World [pdf] - https://news.ycombinator.com/item?id=49352811 - August 2026

> "As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth."

The demographic future of humanity: facts and consequences [pdf] - https://news.ycombinator.com/item?id=44866621 - August 2025 (400 comments) (slides 31-33 of this PDF)

More US Counties See Population Drops Under Trump’s Immigration Crackdown - https://www.bloomberg.com/news/articles/2026-03-26/us-census... | https://archive.today/OGwWj - March 26th, 2026

The US Is Flirting With Its First-Ever Population Decline - https://www.bloomberg.com/news/articles/2026-01-30/trump-imm... | https://archive.today/LdA0d - January 30th, 2026

Goldman Strategists See US Stocks Lagging All Peers Next Decade - https://www.bloomberg.com/news/articles/2025-11-12/goldman-s... | https://archive.today/aINUx - November 12th, 2025

(think in systems)

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#27

Post by rob74 »

tananaev wrote: post #2

Finally some evidence that the system is working. Most countries are borrowing like there's no tomorrow, so obviously rates should go up to compensate the risk of not paying back.

One contributing factor might be that AI companies are raising money via (amongst other methods) also issuing bonds, which might compete with government bonds.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#28

Post by method_capital »

huurtehoog wrote: post #21
method_capital wrote: post #7

Earlier quoted context omitted.

Working is an interesting term (which I agree with btw) because place like Japan with debt at 200%+ of gdp, rates rising are going to annihilate spending in other important areas. Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Japan is closer to 130% debt-to-gdp. The 200% number is based on gross debt and ignores some other mitigating factors for shock value.

Great.

Rates going higher increases interest expense materially. You either rack new debt or you cut in places that are uncomfortable. The point is: responsible leadership in the developed world has gone mia for decades. There's a price to be paid that's real.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#29

Post by p_j_w »

bradleykingz wrote: post #17
lordnacho wrote: post #8

Earlier quoted context omitted.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly? Who could you vote for, in any democracy, that would fit this? Also, how many voters would have the wherewithal to identify such a person?

conservatives?

At least in the US, conservatives have done more to increase the debt than liberals for the last 40 years at least.
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