r/finance • u/wreckingcru VP - Private Equity • Sep 11 '26

Why Global Bond Yields Are Expected to Stay Elevated

https://www.goldmansachs.com/insights/articles/why-global-bond-yields-are-expected-to-stay-elevated
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10

u/PlanetCosmoX Sep 14 '26

Which is fancy talk for saying that due to inflation and heavy borrowing from bad budgets, the world is going all in on the stock market, or is moving away from bonds. Which means we’re entering a different type of economy which is global with inflation. Similar but different from the 80s and 90s which was national with inflation. The hallmark of that economy was crashes.

Another difference is that more people are invested in the market and after all of this bond liquidation there will be more money in the market raising the potential of a crash.

While simultaneously you have the Fed raising rates during a struggling economy, like it did in the 80s and 90s which led to multiple recessions, driven by poor rate management by the Fed.

Unlike the 80s most of the money is concentrated in a few individuals, which means that everyone else loses when they pull out as they also seem to work in concert.

4

u/da_mess Sep 15 '26

The long run equity risk premium of stocks over bonds is 5%. That is the extra return stocks earn over bonds.

30yr Treasury bonds are now yielding 5.3% and are far less risky than stocks.

You really think the globe is all in on stocks?

3

u/PlanetCosmoX Sep 15 '26

Yields are going up because bonds are being sold.
Until interest rates go up, this trend will continue.

Where do you think the money is going?

3

u/da_mess Sep 15 '26

Bonds are being sold because of too much debt in the market PLUS higher inflation risk.

Cash is being rotated into corporate bonds or other sovereign debt. Some will hold cash.

If selling continues and rates rise further, eventually there will be a sale of stocks as people move into safer bond positions. That will lower rates until we hit an equilibrium.

1

u/just4_f Sep 16 '26

I have a contrary opinion and that we can NOT use history to define current period.

The current concentration of wealth in 4-5% of population and Technology bubble being supported by super rich -- will force and prop up stock market a lot more.

I am in that category - what am I supposed to do with the extra cash (1) leave in bank (which is still 0%) (2) Bonds (Sgov barely 3.7% and taxable) OR (3) invest in AI or future technology and get 20-2000% returns.

Specially when stock market and broader population is stupid enough to believe self driving car rhetoric since 2015 and self service Robot coming tomorrow. I am sure they will come - but not at pace and expectations with which stock market is pricing it (Tesla PE is case in point).

Till AI or broader technology bubble is dissipated - Inflation and Interest rates will continue increasing. But then again all politicians and economist are invested in these bubbles too. So let's see how long does this cycle last.

Biggest question - what will be Black Swan for this era's bubble to pop ?🤔