Reuters
After inflation, a bond supply shock may be next for markets
Central banks, the developed world’s most reliable group of bond buyers, could slash debt purchases next year by as much as $2 trillion across the four big advanced economies, implying a potentially hefty rise in many governments’ borrowing costs. For years, but particularly since the COVID-19 pandemic erupted in March 2020, central banks have effectively backstopped government spending, mopping up a significant proportion of the debt hitting markets and preventing yields from rising too high. But if central banks set a schedule for unwinding pandemic-era stimulus, a dearth of highly-rated bonds, especially in Europe, may turn into an excess.
