The US’s growing budget deficit and continued debt-financed spending risk keeping bond yields elevated. That is the assessment of Igor Yelnik, founder of hedge fund Alphidence Capital, according to the Wall Street Journal.
Yelnik also points to rising oil and gas prices as a factor behind the global bond sell-off. He warns that higher interest rates and falling stock markets could force a rapid unwinding of leveraged positions.
“It is a recession scenario that could develop into a vicious cycle,” he says, but stresses that it is uncertain whether the scenario will actually materialize.
