Monetary policy could be tighter than it looks as the pace of government borrowing eclipses the record stimulus of central banks.
The Federal Reserve’s massive asset-buying program hasn’t been matching the surge in U.S. government debt issuance, Goldman Sachs Group Inc. calculates. And it’s much the same with other nations, with only New Zealand set for a net decline in publicly held debt outstanding.
That suggests — low as they are — sovereign bond yields in developed economies are higher than they otherwise would be if central banks were buying more. If sustained, that’ll mean a growing proportion of bonds end up in private hands, rather than central bank or foreign official holdings, as governments continue to rack up their deficits.