Economics
A $1 Trillion Glut of Bonds Is Dwarfing Central-Bank Demand
- Traders are betting on steeper yield curves as supply rises
- Central banks may look to quicken the pace of bond purchases
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As fast and furiously as the world’s central banks are purchasing debt, there’s still about $1 trillion of sovereign bonds coming to market in the months ahead that will be looking for buyers.
The flood of fresh debt, sold by governments to fund pandemic-rescue packages, threatens to dwarf central-bank buying and swamp markets in the U.K., Canada and Australia, according to Bloomberg calculations. Policy-maker purchases will also lag issuance in the U.S. and Japan, where a continuing tilt toward buying short-maturity debt would risk allowing yields on longer-dated bonds to rise unchecked, hurting pension funds and life insurers that rely on these markets.