Bonds with longer terms suffered at the beginning of the sale in London, and the profitability of 30-year-old American treasury bonds increased by 0.03 percentage point to 5 percent, and 30-year Japan bonds reached a record level of 3.29 percent. – writes the Financial Times.
Let us just remind you that Japan got into 234 percent. GDP, which with such an interest rate, if it concerned the entire debt, would mean that annually for interest alone She would have to sacrifice 7.7 percent. gross domestic product. In debt at the moment of zero or even negative interest, many economists promoted, now it is a stone at the neck of the economy.
In the case of the USA, GDP debt is over 124 percent, so the 5 % interest rate on this debt would mean the need to pay 6.2 percent annually. GDP for interest.
The sale also affected the debt of Poland. 10-year bonds are currently listed with a profitability of over 5.55 percent, while a week earlier it was over 0.1 percentage points. less, and at the beginning of May – by 0.4 percentage points less.
Treasury profitability records of 10-year bonds
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Investing.com
The Polish government looking for rape money, wanting to finance a giant deficit, will have to borrow more expensive, which will then translate into escalation of debt service costs. At the end of August, the degree of financing this year's loan needs of the state budget was approaching 90 percent, but you have to think about the next year. The assumptions for the budget show that it will not be better with releasing expenses and income.
According to the estimation of this year's budget by July We spent PLN 39 billion on debt service, which accounted for as much as 12.4 percent. state income and 8.3 percent state expenditure.
“Fiscal policy will become inflationary”
Voltage on state bond markets arise when many main economies face a double challenge: managing high debt and an attempt to stimulate growth without causing inflation, i.e. without real money printing. “It's almost an ideal storm Fear that the current fiscal policy will become inflationaryglobal emission will be potentially greater [pieniądza] and insufficient demand, “said the Financial Times, Mitul Kotecha, head of the macroeconomic strategy of emerging markets in Barclays. This means that the economist is afraid that debt emission will be converted into issue of money.
The concerns related to the deficit in the United States returned this week after the Court of Appeal ruled on Friday that most of the donald Trump's customs tariffs were illegal, threatening hundreds of billions of dollars of potential government income.
“State assets are becoming more and more risky, because politicians have less security, they must increase budget deficits and have lower interest rates,” said Alicia Garcia-Herrero, the main economist for the APAC region at the French Bank Natixis.
Not only actions fall
Anxiety in government bond markets did not translate into increases in action, on the contrary. Actions are apparently not an alternative to capital fleeing the bonds. Japanese Nikkei 225 fell on Wednesday by 0.8 percent, and 1.3 percent in a week, and the American S&PC with 0.7 percent respectively On Tuesday and 1 percent in a week.
The alternative are also not clearly cryptocurrencies, because their capitalization is only $ 800 billion. lower than a week ago and amounts to $ 3.81 billion. On a week of the five most important crypto, only Bitcoin grows only by 0.5 percent. Ethereum and XRP fall by almost 6 percent.
Capital clearly moves to the raw materials. Gold risen in a week by 4.9 percent, beating new historical records, i.e. piercing the level of 3.6 thousand. hole. for the ounce and silver by 6.5 percent, reaching $ 42 for the ounce. Historical record over $ 48 It is getting closer here, which Polish KGHM enjoys, and the NBP is satisfied with gold, which has filled the treasury to the brim in recent years.
