GLOBAL DEBT AT RISK OF "QUALITATIVE CHANGE"
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lobal markets, spurred by policies, have emerged from the March panic during the spread of the COVID-19 pandemic. For now, all major economies, including Europe and the United States, are at the crossroads of a new direction. Although the U.S. stock market experienced a certain degree of correction in October and began to hover around high levels, it is still far from the alltime high it reached in early September. In the current stock market, the global market is still plagued by two factors, i.e., the recurring COVID-19 pandemic and a new round of stimulus
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policy changes. In fact, in the case of the second outbreak of the pandemic, there was no obvious fluctuation in the market, which meant that the capital market stimulated by the policy could hardly get rid of its dependence on the policy. This kind of policy risk that accumulates ceaselessly in the long run also implies the possibility of "qualitative change". In the bond market, there have been signs of a pullback as the dollar index has been flooded with dollar liquidity. In the United States, investment-grade corporate bonds with maturities of more than 10
years underperformed short-term bonds last month and fell the most in August of all maturities, according to Bloomberg Barclays Indices. In the options market, the cost of hedging against inflation of more than 2% over the next five years has more than doubled since February. In Asia, dollar-denominated corporate securities with maturities of more than 10 years performed worst in the two months to September. Some bond markets around the world have begun to signal long-term inflation risks, reflecting growing concern that a prolonged flood of liquidity might drive up future inflation, with the resulting change in interest rates that could be potentially disastrous for capital markets. Reports from international rating agencies have further heightened concerns about the future situation. S&P Global warned that the second
