Global debt hits record high of $305 trillion

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The Institute of International Finance reports that global debt topped $305 trillion in Q1 2022 as China’s debt increased by $2.5 trillion and the US by $1.5 trillion.

That’s a 75% increase since 2012.

My fear is that with central banks trimming balance sheets and leveraged buyers pushed out by rising rates, there will no longer be an appetite for holding that many bonds. That’s something that could push yields structurally higher, even when central banks stop hiking rates.

The IIF warns taht the most vulnerable sector may be emerging markets.

The good news is that the rebound in growth has helped to lower global debt to GDP to 348%, about 15 percentage points below the record from a year ago.