📈 Mounting Debt Across Major Economies:
Global debt surging amid fiscal expansions by top economies
IMF projects public debt to surpass $100 trillion this year, possibly rising to 115% of global GDP in an adverse scenario
Debt "at risk" could reach 134% of GDP for developed economies
💼 Key Drivers Behind the Debt Spike:
U.S. Fiscal Plans:
Potential $7.75 trillion increase in debt by 2035 if tax cuts proceed
UK Budget:
Labour government plans £142 billion in extra borrowing over five years
Germany: Increased debt issuance to support economic revival despite traditional fiscal restraint
China: Pursuing a $1.4 trillion borrowing plan, including 6 trillion yuan in sovereign bonds
🔻 Central Bank Response & Market Reactions:
Central banks have begun easing rates, but may halt "quantitative tightening" to stabilize markets
Rising bond yields signal market discomfort, though demand at auctions remains adequate
U.S. Treasury and British Gilt yields hit recent highs amid political and fiscal pressures
🔮 What Lies Ahead:
Sustained fiscal support may push inflation higher, limiting central banks' capacity to lower rates further
Bond markets may face turbulence as debt issuance continues and interest rate cuts slow
A major test for debt markets is expected as central bank easing cycles wind down next year
Summary:
As fiscal "afterburners" drive sovereign debt to new highs, bond markets brace for potential volatility. Global economies may need to pivot strategies soon to prevent further escalation in borrowing costs.
