Nicole Servi

Thanks for having me.

Yeah.

So if you're an investor looking for yield, that's a great thing.

But if you are a government trying to issue debt, not so great of a thing.

Yes.

And so when we were talking about sovereign bond yields, what we're essentially talking about is the cost of borrowing.

And so with the cost of borrowing going up across the globe, if you're issuing debt, it's just going to be more and more expensive to do that.

And this comes at a time where no matter what advanced economy you're looking at, the fiscal outlook is daunting because of a variety of factors.

And if I need to issue more debt, my interest expense is only going to go up exponentially if the cost of that debt is also rising.

I think that's generally right, but I also think it depends on the country you're talking about.

You have some countries across the globe that are, let's say, more into fiscal austerity and more willing to take on that fight than others.

For instance, even if you look in the Eurozone,

The fiscal outlook for, let's say, France and Belgium, their leverage ratios, they're projected to continue to rise.

But if you look at a pace like Spain or Italy, they've actually already gone through some pretty tough corrections in this regard.

And they're actually making progress towards lowering their debt burdens.

And so it depends on the country that you're looking at.

But in general, I think that is a true statement.

Yeah.

So I think some of that has to do with just bond markets.

We're kind of waiting to see the duration of this energy price shock.