The Largest Bond Markets within the World
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In 2022, the worldwide bond market totaled $133 trillion.
As one of many world’s largest capital markets, debt securities have grown sevenfold during the last 40 years. Fueling this development are authorities and company debt gross sales throughout main economies and rising markets. Over the past three years, China’s bond market has grown 13% yearly.
Primarily based on estimates from the Financial institution for Worldwide Statements, this graphic reveals the most important bond markets on the planet.
ℹ️ Complete debt numbers right here embrace each home and worldwide debt securities in every specific nation or area. BIS notes that worldwide debt securities are issued exterior the native market of the nation the place the borrower resides and canopy eurobonds in addition to overseas bonds, however exclude negotiable loans.
Ranked: The World’s High Bond Markets
Valued at over $51 trillion, the U.S. has the most important bond market globally.
Authorities bonds made up the vast majority of its debt market, with over $26 trillion in securities excellent. In 2022, the Federal authorities paid $534 billion in curiosity on this debt.
China is second, at 16% of the worldwide whole. Native industrial banks maintain the best share of its excellent bonds, whereas overseas possession stays pretty low. International curiosity in China’s bonds slowed in 2022 amid geopolitical tensions in Ukraine and decrease yields.
| Bond Market Rank | Nation / Area | Complete Debt Excellent | Share of Complete Bond Market |
|---|---|---|---|
| 1 | 🇺🇸 U.S. | $51.3T | 39% |
| 2 | 🇨🇳 China | $20.9T | 16% |
| 3 | 🇯🇵 Japan | $11.0T | 8% |
| 4 | 🇫🇷 France | $4.4T | 3% |
| 5 | 🇬🇧 United Kingdom | $4.3T | 3% |
| 6 | 🇨🇦 Canada | $4.0T | 3% |
| 7 | 🇩🇪 Germany | $3.7T | 3% |
| 8 | 🇮🇹 Italy | $2.9T | 2% |
| 9 | 🇰🇾 Cayman Islands* | $2.7T | 2% |
| 10 | 🇧🇷 Brazil* | $2.4T | 2% |
| 11 | 🇰🇷 South Korea* | $2.2T | 2% |
| 12 | 🇦🇺 Australia | $2.2T | 2% |
| 13 | 🇳🇱 Netherlands | $1.9T | 1% |
| 14 | 🇪🇸 Spain | $1.9T | 1% |
| 15 | 🇮🇳 India* | $1.3T | 1% |
| 16 | 🇮🇪 Eire | $1.0T | 1% |
| 17 | 🇲🇽 Mexico* | $1.0T | 1% |
| 18 | 🇱🇺 Luxembourg | $0.9T | 1% |
| 19 | 🇧🇪 Belgium | $0.7T | >1% |
| 20 | 🇷🇺 Russia* | $0.7T | >1% |
*Signify nations the place whole debt securities weren’t reported by nationwide authorities. These figures are the sum of home debt securities reported by nationwide authorities and/or worldwide debt securities compiled by BIS.
Information as of Q3 2022.
Because the above desk reveals, Japan has the third largest debt market. Japan’s central financial institution owns an enormous share of its authorities bonds. Central financial institution possession hit a document 50% because it tweaked its yield curve management coverage that was launched in 2016. The coverage was designed to assist increase inflation and forestall rates of interest from falling. As inflation started to rise in 2022 and bond buyers started promoting, it needed to improve its yield to spur demand and liquidity. The adjustment despatched shockwaves by means of monetary markets.
In Europe, France is house to the most important bond market at $4.4 trillion in whole debt, surpassing the UK by roughly $150 billion.
Banks: A Main Purchaser in Bond Markets
Like central banks world wide, industrial banks are key gamers in bond markets.
The truth is, industrial banks are among the many high three patrons of U.S. authorities debt. It’s because industrial banks will reinvest consumer deposits into interest-bearing securities. These usually embrace U.S. Treasuries, that are extremely liquid and one of many most secure belongings globally.
As we will see within the chart beneath, the banking sector usually surpasses an financial system’s whole GDP.
As rates of interest have risen sharply since 2022, the value of bonds has been pushed down, given their inverse relationship. This has raised questions on what kind of bonds banks maintain.
Within the U.S., industrial banks maintain $4.2 trillion in Treasury bonds and different authorities securities. For giant U.S. banks, these holdings account for nearly 24% of belongings on common. They make up a mean 15% of belongings for small banks in 2023. Since mid-2022, small banks have decreased their bond holdings as a result of rate of interest will increase.
As larger charges reverberate throughout the banking system and wider financial system, it could expose additional strains on world bond markets which have expanded quickly in an period of dovish financial coverage and ultra-low rates of interest.