What global bond shock means for UK investors
Rising US national debt and high borrowing costs are creating a 'bond shock' that threatens global financial stability. Analysts warn that the US's high debt-to-GDP ratio and lack of fiscal reduction plans could have significant negative implications for international investors.
Why it matters
US Treasury bonds serve as the foundation for global interest rates; instability in this market can lead to widespread economic volatility and increased borrowing costs worldwide.
Traders on the floor of the New York Stock Exchange. via Getty Images.
The rising debt pile in the US economy has caused borrowing costs for the world’s global reserve currency to hit the highest level in over 20 years. This is not just a problem for the Trump administration because US Treasuries form the basis for borrowing rates worldwide.
Efforts by the Treasury department to calm investor nerves have sparked chaos in cryptocurrency and gold during the past weeks. As markets return from the summer holidays it could have important implications for investor portfolios this autumn.
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