Last night on ‘The Business’\u00a0Martin Whetton\u00a0from Westpac financial markets strategy team took apart the US bond market with\u00a0Alicia Barry.<\/p>\n
It’s a great explainer.<\/p>\n
“$85 billion a day the US government’s paying its bondholders, its lenders, as is the technical term.<\/p>\n
“And so that’s obviously a lot, but it’s not a lot relative to the size of how much debt they have. But that has jumped up pretty sharply from an average of around $20 billion two to three years ago.<\/p>\n
“Now, as you say, the bond markets have been flashing red. What’s been happening is there is a concern over inflation.<\/p>\n
“There’s a concern over lack of forward guidance from the Fed as to what they’ll do on policy. There’s an expectation of a rate hike, but there is still inflation and they’re not combating that.<\/p>\n
“There is quantitative tightening, so the central bank is reducing its holdings of government debt, so reducing its balance sheet.<\/p>\n
“And then you’ve got the government itself borrowing money, plus you’ve got this new cohort of the hyperscalers who are around half a trillion dollars this year and about the same last year, whose credit ratings are extremely high, whose business models are very good.<\/p>\n
“And they come at a yield over the government curve. And so investors who need to buy bonds for part of their superannuation portfolio or for regulatory reasons are saying, ‘Well, I’d rather actually lend my money to Google or Meta or others rather than give it to the US government or in some countries, the sovereigns there’.<\/p>\n
“And it’s actually worth noting that yesterday Google or Alphabet was able to issue $5.5 billion Australian dollars in the market here. It’s the largest ever corporate bond deal that we’ve seen by quite a margin.<\/p>\n
“But the fact that it saw about $20 billion worth of orders suggests very, very high demand, again, for Australian dollars and the assets here, even though the company itself is not an Australian company.”<\/p>\n
Watch\u00a0The Business<\/a>, Mondays to Thursdays 8:44pm on ABC News Channel, after the Late News on ABC TV, and anytime on\u00a0ABC iView<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Last night on ‘The Business’\u00a0Martin Whetton\u00a0from Westpac financial markets strategy team took apart the US bond market with\u00a0Alicia…\n","protected":false},"author":2,"featured_media":805048,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[2001,64,63,166,2009,99,2005,160,2010,2006,2002,1491],"class_list":["post-862722","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-asx","tag-au","tag-australia","tag-australian-dollar","tag-bitcoin","tag-business","tag-dow-jones","tag-live-blog","tag-live-update","tag-nyse","tag-share-market","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/862722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=862722"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/862722\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/805048"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=862722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=862722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=862722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}