What Gulf economies need to watch out for as potential bond crisis looms
Much has been heard recently about the risk of a bond market crisis, with US government bond yields this month reaching their highest levels since 2002, with some warning of 6 per cent US Treasury benchmarks. Yields in several advanced economies globally have also hit multi-decade highs on the back on inflation fears amid soaring energy costs. However, a crisis related to investors losing…
The potential for a bond market crisis is a growing concern for Gulf economies, as technical factors such as increased issuance and market volatility could trigger a downward spiral in bond prices. A crisis in the US Treasury market, which serves as a benchmark for global borrowing costs and corporate debt, could have far-reaching implications for the region.
The increasing amount of AI-related debt issuance, estimated to reach $300 billion this year, may also exacerbate the situation if profitability expectations deteriorate. Investors should closely monitor these issues and be prepared for potential disruptions in the bond market.
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