Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 57
THE DRUMMER'S EAR | RHYTHMIC REASONING
FIXED INCOME OVERVIEW
THE BOND MARKET MAKES UP A SIGNIFICANT SHARE OF GLOBAL DEBT
Total global debt
Top 3 largest bond markets
Global bond market
Fin.
corps,
34%
>$325
trillion
40%
~$140tn
~325%
Size of global
bond market
>45%
of GDP
Gov't,
53%
19%
Non-fin
corps,
14%
17%
GOVERNMENT DEBT AND DEFICITS ARE KEY DRIVERS OF BOND YIELDS1
Debt-servicing costs may remain onerous
amid rising fiscal deficits
Budget deficit (% of GDP)
U.S.
Canada
U.K.
France
0%
Government bond yields have increased
globally
5%
4%
-2%
3%
2%
-4%
1%
-6%
0%
-8%
U.S. 10-yr
Current
Pre-pandemic
Canada 10-yr
Current
U.K. 10-yr
France 10-yr
Pre-pandemic level
TRADE POLICY UNCERTAINTY COULD SLOW THE PACE OF MONETARY POLICY EASING
The Fed remains relatively more
cautious than other central banks2
Region
IG issuers are 4x less likely to default
than HY issuers
Current
1-yr fwd
Rating
YTM3
Default %
2.50%
2.75%
AAA-BBB
4.7%-5.0%
0%-0.5%
4.25%
3.00%
BB-B
5.7%-6.8%
0.5%-3.0%
2.00%
2.00%
CCC or lower
>9.5%
>25%
4.00%
3.25%
Yields as at September 2025
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Sources: SIFMA 2024 Capital Markets Fact Book, Bloomberg Finance LP, Scotia Wealth Management | 1 – Pre-pandemic period references level at the end of 2019. | 2 – 1-yr fwd rate based on Scotiabank Economics’ September 11, 2025 forecasts. U.S.
Fed funds rate is the upper bound of the target range. Eurozone rate is the deposit rate. | 3 – YTM = yield to maturity
