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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

#71

Post by smallmancontrov »

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.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

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

#72

Post by grey-area »

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

What could possibly go wrong.

Nobody has ever tried this before!

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

#73

Post by podocarp »

Turns out countries with constitutions forbidding excessive debt are quite smart. It's like phone addiction -- if the parents don't lead by example and strictly enforce "no phones at the dinner table" then slowly it's just gonna creep back in and everyone's just staring at their phones again.

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

#74

Post by wongarsu »

seanmcdirmid wrote: post #69
Cruncharoo wrote: post #64

Earlier quoted context omitted.

Sort of. You also have to consider exchange rate futures, the value of the currency you will be getting paid in may change dramatically.

Is the euro doing or expected to do something strange?

Maybe the USD is expected to lose value against the euro?

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

#75

Post by huurtehoog »

method_capital wrote: post #28
huurtehoog wrote: post #21

Earlier quoted context omitted.

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.

Remains important to base any analysis on the correct numbers.

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

#76

Post by Onewildgamer »

whateveracct wrote: post #11
pjc50 wrote: post #6

The war(s), especially with the impact on pipelines and the Houthis taking over more of Yemen, are finally affecting fuel prices and hence turning the global economic outlook less positive. You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining.

Not just reserves, but also all the oil already on ships slowly making its way to its destination. I think I even saw someone predict that around September, the oil issue would get worse due to how slowly those ships move.

Are you referring to this https://www.youtube.com/watch?v=Jf3rHAXOZj0

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

#77

Post by Cruncharoo »

seanmcdirmid wrote: post #69
Cruncharoo wrote: post #64

Earlier quoted context omitted.

Sort of. You also have to consider exchange rate futures, the value of the currency you will be getting paid in may change dramatically.

Is the euro doing or expected to do something strange?

Not sure, not my domain. My comment was just highlighting that comparing the yields on two sovereign bonds with the same maturity doesn’t necessarily mean one is riskier than the other, there are other factors.

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

#78

Post by sph »

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?

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Maybe we should consider the possibility that there is no such candidate, or if there is, they cannot compete against the 'populists'. What then?

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

#79

Post by skybrian »

neilwilson wrote: post #59
skybrian wrote: post #19

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

Only in the secondary market. In the primary market they require different types of money for settlement. If you buy an AI issue, then the AI company has the bank deposit and the bank still has the matching reserves needed to buy government bonds in the primary market. All that changes is the ownership tag on the bank deposit.

But looking one step back, the investor might need to sell something else to raise cash to buy the stock?

I suppose in that respect, all investments compete.

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

#80

Post by ajross »

llm_nerd wrote: post #49
ajross wrote: post #33

Earlier quoted context omitted.

> the US is catastrophically indebted Debt service costs as a percent of GDP are in fact lower than they were in the 1980's, when things came out fine. Is this the best way to run the budget? Likely no. Should we make policy changes? Certainly yes. Is the best way to drive that policy argument flinging around adjectives like " catastrophically indebted". No. If you have a suggestion make a suggestion. Screaming about…

> Debt service costs as a percent of GDP are in fact lower than they were in the 1980's This is an amazing use of the "in fact" trope, in exactly the same misleading way[1]. I talked about debt, and you casually shifted to servicing costs which presumes that rates stay historically low...when they're actually rapidly rising. Comical. In the 1980s, the debt to GDP ratio was less than half what it currently is. Rates w…

You're doubling down with more hyperbole. What's the policy suggestion? What do you propose to cut? Where do you propose to find new revenue? What compromises are you willing to make to other priorities and what stands are you taking on which you won't budge?

Shouting about deficits is, to be blunt, just crack for the incurious mind. It's a party you're throwing for people who agree with you. Refusing to treat with the very real (and despite your hyperbole, very soluble) problems is likewise a trick your brain is using to expand the guest list: you can get almost everyone to sit at a "Deficits Suck" table, it's much harder to populate a "Let's Talk About Entitlement Restructuring and a VAT" forum.

But it's the boring wonks at the forum (the one's you're shouting at!) who are ultimately on the hook for saving you.

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