...Bond Yields Rise Sharply: The sharp increase in developed market (DM) government bond yields this year is a significant adverse development. Yields have risen across all DMs and across the yield curve, with benchmark 10-year yields hitting multi-decade highs in many cases. Year to date, 10- year bond yields for the 10 largest DMs (DM10) have risen by an average of 81bp. The greatest increases have generally been in the countries with the weakest public finances, including France (135bp), Italy (108bp), the US (106bp), Japan (94bp) and the UK (94bp). Government Debt Is Rising Strongly: Fitch Ratings forecasts that DM general government debt will rise by USD3.9 trillion to USD75.4 trillion (102% of GDP) by end-2026, up sharply from USD26 trillion (68% of GDP) 20 years ago. We forecast the debt of the DM10 at USD68.5 trillion (112.7% of GDP) at end-2026. By comparison, Fitch projects the median DM government debt ratio at 53.7%, underlining the outsized role of the US and some other large...
