I showed a chart of world bond yields here. This chart shows the average for world bond yields, weighted by their PPP GDP, and covering countries which together make up 83% of world GDP, and is compared with the US 10-year bond yield. The US makes up ~22% of world GDP. I have excluded Argentina and Turkey from the calculation of world bond yields, because their inflation rates (and therefore bond yields) are so high they would distort the picture. However, Russia is included, and its bond yield has risen substantially since the invasion of Ukraine, for obvious reasons.
Note how the world average has in the past been above the US yield, and how for the first time in decades, is now about the same --- including Russia --- as bond markets adjust to raised US inflation and bond issuance risks.
The conclusions from my previous piece are unchanged: at this stage in the cycle, bond yields should be falling. And they are not.
No comments:
Post a Comment