Strange that this is happening globally. I get that this is a US site, and people don't care, but this does not seem to be a French story at all. Nor is it a US story. France is the worst example (worse than the US I might add). But EU yields are up to 3.5% (not far behind, and, worryingly, making the same moves), and the same goes for other countries (Netherlands 3.6%, Spain 3.6%, Austria 3.8%, Germany 3.6%, Japan 3.1%, ..., all up from zero to negative 3 years ago, Poland 6.4%, Czechnya 5.3%, Hungary 5.8%, Australia 5.5%, ... all up from 0.5-2% 3 years ago). The same pattern is all over the place, and it's barely started.
The problem is that it's the factor behind the current and the previous interest rate that makes the effective difference in budget. Because if your interest goes from 0.1% to 3.5%, your interest payments go up 35x, or 3500%. It's logical and predictable, and so there are some mitigations in place, but ... And it means the good borrowers are in the deepest shit (need the biggest budget adjustments)
(and sorry to say this, but this is 100% a self-inflicted wound. EU countries bet on US for security (against US wishes), Russian LNG for energy (easy to satisfy green targets), and China for an export market). All bets blew up in the politicians faces, cost hundreds of billions EU-wide and so we're seeing the demands on government budgets, that need to re-invest without the previous investments being paid off ... I'm sorry but however terrible AfD is, for example Germany's CDU 100% deserves getting clobbered in elections, because the CDU alliances (essentially all parties) made horrible decisions. AfD and Die Linke are worse on many points, but at least they didn't cause the current situation.
Also there's some sideshows, like Hungary actually being down to 5.8%, presumably through more trust in the current government vs the last. But the pattern vs 3 years ago is one of constant rise.
And there are exceptions, India, for example, is showing a different pattern. China does not make sense (but I'm sure that's just by design, and plenty of indicators they're not actually doing well). And then Russia, but I have a guess for that one. Ukraine ... etc ...
But bond investors seem to be expecting something dramatic to happen soon, with odds rising fast, at least across US and EU, including individual countries. At the very least, investors are expecting an economic disaster for the next 10 years (at least compared to the last 10 years)
spwa4 · · focus · HN ↗
The problem is that it's the factor behind the current and the previous interest rate that makes the effective difference in budget. Because if your interest goes from 0.1% to 3.5%, your interest payments go up 35x, or 3500%. It's logical and predictable, and so there are some mitigations in place, but ... And it means the good borrowers are in the deepest shit (need the biggest budget adjustments)
(and sorry to say this, but this is 100% a self-inflicted wound. EU countries bet on US for security (against US wishes), Russian LNG for energy (easy to satisfy green targets), and China for an export market). All bets blew up in the politicians faces, cost hundreds of billions EU-wide and so we're seeing the demands on government budgets, that need to re-invest without the previous investments being paid off ... I'm sorry but however terrible AfD is, for example Germany's CDU 100% deserves getting clobbered in elections, because the CDU alliances (essentially all parties) made horrible decisions. AfD and Die Linke are worse on many points, but at least they didn't cause the current situation.
Also there's some sideshows, like Hungary actually being down to 5.8%, presumably through more trust in the current government vs the last. But the pattern vs 3 years ago is one of constant rise.
And there are exceptions, India, for example, is showing a different pattern. China does not make sense (but I'm sure that's just by design, and plenty of indicators they're not actually doing well). And then Russia, but I have a guess for that one. Ukraine ... etc ...
But bond investors seem to be expecting something dramatic to happen soon, with odds rising fast, at least across US and EU, including individual countries. At the very least, investors are expecting an economic disaster for the next 10 years (at least compared to the last 10 years)
wqweto · · focus · HN ↗