The market panic triggered by the recent spike in U.S. bond interest rates is causing other indebted countries to shiver, as the latter have used lower costs to borrow for years. Reuters
The market panic triggered by the recent surge in U.S. bond interest rates is causing other indebted countries to shudder because the latter have used lower costs to borrow for years.
With the U.S. economy to move forward quickly, from Australia to Italy’s government bond yield also rose, following the rise in the U.S. bond yield trend. But higher costs could undermine Europe’s continued weak recovery, at a time when the new coronavirus outbreak in Europe is out of control and countries have extended embargo measures. Developing countries that rely on U.S. dollar funding are not happy to see the cost of borrowing rise.
UBS (UBS) global wealth management company credit department head Walker said: “Investors are continuing to pay attention to this thing. As soon as the cost of interest rates rise, it will compress a country’s fiscal space and increase future deficits, especially if the country continues to borrow for investment and reform. The issue of debt sustainability deserves attention.”
According to the Bloomberg Barclays index, the government bond yield of the seven major industrial countries (G7) has doubled since the market opened at the beginning of the year, having previously surged 27 basis points to 0.48%.
G7 government bond yield rate rise, by the U.S. bond yield market moved the degree of unknown, but the Netherlands International Group (ING) analysts believe that the U.S. debt is the key driver, and even advocate that Europe, isolated from the United States will not appear again inflationary trade (reflation trade).
Regardless of whether the rise in G7 government bond yield can be attributed to the impact of U.S. economic policies, soaring government bond prices have become a headache for policymaking officials and investors.
The European Central Bank (ECB) President Lagarde said in an interview with Bloomberg that policy officials will use all tools to stop the continued rise in bond yields. the ECB has accelerated the pace of bond purchases to keep down the rising cost of borrowing.
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