Hello Traders, Investors and Friends, have a nice holiday!
The US10Y bonds yield and the US03M bonds yield has flipped upside down since this 2022.
It has only flipped upside down three times in history since the 20th century.
The first time is in 2000 dot-com bobble, the second is in 2008 market crash, the third time is in 2019 unlimited QE
I think there’s a debt crisis coming, or a dollar credit crisis.
The long-term and short-term interest rates upside down is one of the best indicators for predicting recessions across a range of economic variables, and it has successfully predicted all recessions in recent decades without any false. So it's worth to watch.
There are four types of financial crisis:
The first is currency crisis;
Second, banking crisis;
Third, debt crisis;
Fourth, capital market crisis.
Continued interest rate hikes in the US and Europe due to inflation will dampen consumer demand and economic activity. In addition to inflation in Europe, there is also the impact of the energy crisis. In the case of weak demand in enjoying countries such as Europe and the United States, it will be transmitted to crude oil countries, producing countries and raw material countries. The decline in aggregate demand has a worldwide impact.
The IMF predicted that the global economic growth rate in 2023 will be 2.7%. The World Bank predicted in June this year that the global economic growth rate in 2023 will be 3%. Now it has been revised down to 1.9%. If the two major international economic institutions in the world lower the world economic growth rate in 2023 to below 3%, it means that they judge that the global economic recession in 2023 is inevitable. The managing director of the IMF, said "It is not ruled out that a debt crisis will happen in emerging market countries. In 2023, 2/3 of developing countries and 1/3 of emerging market countries may appear to varying degrees' debt crisis."
In 2021, the global debt is 272 trillion dollars. The global Debt-to-GDP ratio is extremely high. The developed economies to GDP ratio is 119.3%, and the Debt-to-GDP ratio of emerging market economies is 65.8%.
For developing countries and emerging market countries, most of the fiscal spending plans hit by the COVID-19 have expired by the end of 2021. Emerging market and developing economies that adopt austerity policy in 2022-2023 will rise from more than 60% in 2021 to more than 80%, and government spending as a proportion of GDP will be lower than in 2019. Rising interest rates in developed countries have put enormous pressure on the public finances of emerging market countries and developing economies. For countries with high levels of foreign debt, the financing environment has tightened, exchange rates have depreciated, and imported inflation has risen. These factors make them face a trade-off between monetary policy and fiscal policy.
The logic, you can think for yourself from the two perspectives of "bond issuance" and "interest rate", so I won't explain it in detail here.
All in all, this is not so much a debt crisis as a dollar credit crisis. Because another name for credit is debt.
Everything is not good to overdo it.
Anyway, happy holiday and best wishes!
And also, happy trading!
This is my opinion, I really hope it will be useful for you.
This is an article not financial advice, always do your own research.
And please don't forget to support this idea with your like and comment, It means a lot to me, thanks.
Be prepared and save your money. Make big profits!
The US10Y bonds yield and the US03M bonds yield has flipped upside down since this 2022.
It has only flipped upside down three times in history since the 20th century.
The first time is in 2000 dot-com bobble, the second is in 2008 market crash, the third time is in 2019 unlimited QE
I think there’s a debt crisis coming, or a dollar credit crisis.
The long-term and short-term interest rates upside down is one of the best indicators for predicting recessions across a range of economic variables, and it has successfully predicted all recessions in recent decades without any false. So it's worth to watch.
There are four types of financial crisis:
The first is currency crisis;
Second, banking crisis;
Third, debt crisis;
Fourth, capital market crisis.
Continued interest rate hikes in the US and Europe due to inflation will dampen consumer demand and economic activity. In addition to inflation in Europe, there is also the impact of the energy crisis. In the case of weak demand in enjoying countries such as Europe and the United States, it will be transmitted to crude oil countries, producing countries and raw material countries. The decline in aggregate demand has a worldwide impact.
The IMF predicted that the global economic growth rate in 2023 will be 2.7%. The World Bank predicted in June this year that the global economic growth rate in 2023 will be 3%. Now it has been revised down to 1.9%. If the two major international economic institutions in the world lower the world economic growth rate in 2023 to below 3%, it means that they judge that the global economic recession in 2023 is inevitable. The managing director of the IMF, said "It is not ruled out that a debt crisis will happen in emerging market countries. In 2023, 2/3 of developing countries and 1/3 of emerging market countries may appear to varying degrees' debt crisis."
In 2021, the global debt is 272 trillion dollars. The global Debt-to-GDP ratio is extremely high. The developed economies to GDP ratio is 119.3%, and the Debt-to-GDP ratio of emerging market economies is 65.8%.
For developing countries and emerging market countries, most of the fiscal spending plans hit by the COVID-19 have expired by the end of 2021. Emerging market and developing economies that adopt austerity policy in 2022-2023 will rise from more than 60% in 2021 to more than 80%, and government spending as a proportion of GDP will be lower than in 2019. Rising interest rates in developed countries have put enormous pressure on the public finances of emerging market countries and developing economies. For countries with high levels of foreign debt, the financing environment has tightened, exchange rates have depreciated, and imported inflation has risen. These factors make them face a trade-off between monetary policy and fiscal policy.
The logic, you can think for yourself from the two perspectives of "bond issuance" and "interest rate", so I won't explain it in detail here.
All in all, this is not so much a debt crisis as a dollar credit crisis. Because another name for credit is debt.
Everything is not good to overdo it.
Anyway, happy holiday and best wishes!
And also, happy trading!
This is my opinion, I really hope it will be useful for you.
This is an article not financial advice, always do your own research.
And please don't forget to support this idea with your like and comment, It means a lot to me, thanks.
Be prepared and save your money. Make big profits!
