Hledat v komentářích
Investiční doporučení
Výsledky společností - ČR
Výsledky společností - Svět
IPO, M&A
Týdenní přehledy
 

Detail - články
The Real Interest-Rate Risk

The Real Interest-Rate Risk

07.01.2013 9:08

Since 2007, the financial crisis has pushed the world into an era of low, if not near-zero, interest rates and quantitative easing, as most developed countries seek to reduce debt pressure and perpetuate fragile payment cycles. But, despite talk of easy money as the “new normal,” there is a strong risk that real (inflation-adjusted) interest rates will rise in the next decade.

Total capital assets of central banks worldwide amount to $18 trillion, or 19% of global GDP – twice the level of ten years ago. This gives them plenty of ammunition to guide market interest rates lower as they combat the weakest recovery since the Great Depression. In the United States, the Federal Reserve has lowered its benchmark interest rate ten times since August 2007, from 5.25% to a zone between zero and 0.25%, and has reduced the discount rate 12 times (by a total of 550 basis points since June 2006), to 0.75%. The European Central Bank has lowered its main refinancing rate eight times, by a total of 325 basis points, to 0.75%. The Bank of Japan has twice lowered its interest rate, which now stands at 0.1%. And the Bank of England has cut its benchmark rate nine times, by 525 points, to an all-time low of 0.5%.

But this vigorous attempt to reduce interest rates is distorting capital allocation. The US, with the world’s largest deficits and debt, is the biggest beneficiary of cheap financing. With the persistence of Europe’s sovereign-debt crisis, safe-haven effects have driven the yield of ten-year US Treasury bonds to their lowest level in 60 years, while the ten-year swap spread – the gap between a fixed-rate and a floating-rate payment stream – is negative, implying a real loss for investors.

The US government is now trying to repay old debt by borrowing more; in 2010, average annual debt creation (including debt refinance) moved above $4 trillion, or almost one-quarter of GDP, compared to the pre-crisis average of 8.7% of GDP. As this figure continues to rise, investors will demand a higher risk premium, causing debt-service costs to rise. And, once the US economy shows signs of recovery and the Fed’s targets of 6.5% unemployment and 2.5% annual inflation are reached, the authorities will abandon quantitative easing and force real interest rates higher.

Japan, too, is now facing emerging interest-rate risks, as the proportion of public debt held by foreigners reaches a new high. While the yield on Japan’s ten-year bond has dropped to an all-time low in the last nine years, the biggest risk, as in the US, is a large increase in borrowing costs as investors demand higher risk premia.

Once Japan’s sovereign-debt market becomes unstable, refinancing difficulties will hit domestic financial institutions, which hold a massive volume of public debt on their balance sheets. The result will be chain reactions similar to those seen in Europe’s sovereign-debt crisis, with a vicious circle of sovereign and bank debt leading to credit-rating downgrades and a sharp increase in bond yields. Japan’s own debt crisis will then erupt with full force.

Viewed from creditors’ perspective, the age of cheap finance for the indebted countries is over. To some extent, the over-accumulation of US debt reflects the global perception of zero risk. As a result, the external-surplus countries (including China) essentially contribute to the suppression of long-term US interest rates, with the average US Treasury bond yield dropping 40% between 2000 and 2008. Thus, the more US debt that these countries buy, the more money they lose.

That is especially true of China, the world’s second-largest creditor country (and America’s largest creditor). But this arrangement is quickly becoming unsustainable. China’s far-reaching shift to a new growth model implies major structural and macroeconomic changes in the medium and long term. The renminbi’s unilateral revaluation will end, accompanied by the gradual easing of external liquidity pressure. With risk assets’ long-term valuation falling and pressure to prick price bubbles rising, China’s capital reserves will be insufficient to refinance the developed countries’ debts cheaply.

China is not alone. As a recent report by the international consultancy McKinsey & Company argues, the next decade will witness rising interest rates worldwide amid global economic rebalancing. For the time being, the developed economies remain weak, with central banks attempting to stimulate anemic demand. But the tendency in recent decades – and especially since 2007 – to suppress interest rates will be reversed within the next few years, owing mainly to rising investment from the developing countries.

Moreover, China’s aging population, and its strategy of boosting domestic consumption, will negatively affect global savings. The world may enter a new era in which investment demand exceeds desired savings – which means that real interest rates must rise.

Zhang Monan is a fellow of the China Information Center, fellow of the China Foundation for International Studies, and a researcher at the China Macroeconomic Research Platform.

Copyright: Project Syndicate, 2013.


Váš názor
Na tomto místě můžete zahájit diskusi. Zatím nebyl zadán žádný názor. Do diskuse mohou přispívat pouze přihlášení uživatelé (Přihlásit). Pokud nemáte účet, na který byste se mohli přihlásit, registrujte se zde.
Aktuální komentáře
24.03.2026
21:10Akcie odmazaly část ztrát díky naději na jednání o Hormuzu, válka však dál trvá  
17:00J&T ARCH INVESTMENTS SICAV, a.s.: Vnitřní informace
16:19PODCAST Traders Talk: Trhem zmítá extrémní strach. Jak se v něm zorientovat a udělat co nejméně škody
16:10Turecko zvažuje kvůli válce využití zlatých rezerv k obraně měny
15:21Deset let nulová inflace…
13:44Energetický šok opět otestuje měnovou politiku Fedu. Klíčová bude jeho délka a intenzita
12:24Anthropic vstupuje do boje o agentní AI. Claude může na dálku ovládat počítač
12:12S&P Global: Růst aktivity v soukromém sektoru v eurozóně v březnu zpomalil
12:11Holešovice zrychlují: ceny bytů rostly o 25 %
11:14Co věřit Trumpovi a jak zareaguje Írán? Trhy stále nevědí, na jakou kartu si vsadit  
11:09Revolut hlásí rekordní zisk před zdaněním. O desítky procent roste počet klientů i předplatného
9:51AI ano, ale ne jako jádro portfolia. Erhard Radatz z Invesca o technologiích, válce v Íránu, energetice i návratu zájmu o Čínu
9:45Důvěra v českou ekonomiku v březnu stoupla u podnikatelů i spotřebitelů
9:36EU a Austrálie se dohodly na odstranění cel, bezpečnostní spolupráci i těžebních projektech
8:57Rozbřesk: Trumpova otočka jako test citlivosti středoevropských měn na ropu
8:51Trhy se uklidňují po prudkých výkyvech, pozornost ale zůstává na Blízkém východě  
6:03Stratégové nadále věří evropským akciím. I přes rizika čekají návrat Stoxx 600 na rekordy  
23.03.2026
21:20Překvapivě zelené pondělí na Wall Street  
17:36Hyperscaleři, jejich mohutné investice a to, co firmy skutečně vydělávají
16:14PODCAST Týdenní výhled: Trump vystrašil trhy ultimátem Íránu, ale znovu otočil  

Související komentáře
Nejčtenější zprávy dne
Nejčtenější zprávy týdne
Nejdiskutovanější zprávy týdne
Kalendář událostí
ČasUdálost
0:00GameStop Corp (01/26 Q4, Aft-mkt)
9:30DE - PMI v průmyslu
10:00EMU - PMI v průmyslu
14:00HU - Jednání MNB, základní sazba