Waiting for the last straw

The debt and deficit problems are not exclusive of the US. With the major exception of China, where yields are plummeting because of the big slowdown in their economy, Germany, The UK and Japan all have seen their long term yields gone up abruptly since inflation came back in 2022. And the problem with that is that the paradigm where bonds are less volatile than stocks and with more moderate drawdowns has been questioned. Over the last 30 days, 30 year JGB yields have gone up 50 bps, producing losses of 7%. In just a month. If auctions in the US (and the other major economies) continue to be deserted at certain yield levels, we’re going to see higher yields, and consequently higher cost of debt, which will affect everything, as bonds are the stepping stone to value all assets. But governments don’t seem concerned about that and continue to push spending. We’re waiting for the straw that breaks the camel back.

Want to know more? You can find all our posts at https://www.myfundamental.net/insights

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning

#policymistake #ratecut #stagflation