Who actually holds the global debt?
By International Adviser, 8 Jun 18
Despite much talk of debt reduction and deleveraging since the financial crisis, global debt levels are higher than ever before. Several risks arise for investors and for financial and economic stability, according to Daniel Murray, head of global research at EFG Asset Management.
One other concern related to foreign holders is that they may periodically go on a ‘buyers’ strike’. That was seen in the late 1980s/early 1990s when Japan was a big buyer of US Treasury bonds.
In 1985, for example, a rise in US bond prices was offset, for Japanese buyers, by yen strength.
The same pattern was seen in 1986. Many Japanese investors lost patience, being unwilling to buy more US bonds until their price had dropped.
Fears of a Japanese buyers’ strike became a more-or-less permanent feature of US Treasury bond auctions during the period.
Tags: EFG
