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Mapped: Global Macroeconomic Risk, by Country in 2022

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Mapped: Global Macroeconomic Risk, by Country in 2022

Risk Map

This infographic is available as a poster.

The Global Macroeconomic Risk Map in 2022

When Russia invaded Ukraine, vital grain export routes shut down in Ukraine’s Port of Odesaโ€”causing global food prices to soar.

Since then, energy markets have been disrupted, leading European heating costs to skyrocket. Meanwhile, global inflation is high, and central banks around the world are raising interest rates in response to rising price pressures.

This Markets in a Minute from New York Life Investments shows the world macroeconomic risk map in 2022 against a shifting economic landscape.

Macroeconomic Risk Map: The Methodology

Macroeconomic risk is an overarching metric that takes into account many external risk factors that could impact investor portfolios and business valuations within a country. These factors include items like monetary policy, trade flows, and the political climate.

In the data from Allianz Trade, a countryโ€™s macroeconomic risk is determined based on the following categories:

  • Economic Risk: Indebtedness, monetary policy, economic structure
  • Political Risk: Institutional independence, policy effectiveness, power concentration
  • Structural Business Environment: Ease of doing business, regulatory framework
  • Commercial Risk: Short-term demand disruption
  • Financing Risk: Risk of short-term disruptions of accounts receivables

In the context of this data, each calculation for macroeconomic risk level is ultimately a proxy representing the risk of companies not making debt payments within a given country.

Increasing Challenges

After the U.S. increased interest rates in the 1980s, many emerging markets fell into crisis as debt payments (denominated in U.S. dollars) rose. Fast forward 10 years later, and rising U.S. interest rates triggered the Mexican peso crisis in 1994.

More recently, in 2013, when the Fed began tapering its bond purchases, it led to steep investment outflows from India, Indonesia, and Brazil.

Today, as U.S. interest rates rise at the fastest pace in decades, emerging markets are facing new pressures. The good news is that some countries are absorbing the shock thanks to higher bank reserves and reasonable growth. However, at the same time, high inflation and social unrest are fueling higher risk.

Given this complex picture, which countries and jurisdictions are at the highest risk as geopolitical tensions unfold?

CountryRisk Level
๐Ÿ‡ฆ๐Ÿ‡ซ AfghanistanHigh Risk
๐Ÿ‡ฆ๐Ÿ‡ฑ AlbaniaHigh Risk
๐Ÿ‡ฆ๐Ÿ‡ด AngolaHigh Risk
๐Ÿ‡ฆ๐Ÿ‡ท ArgentinaHigh Risk
๐Ÿ‡ฆ๐Ÿ‡ฒ ArmeniaHigh Risk
๐Ÿ‡ง๐Ÿ‡ฉ BangladeshHigh Risk
๐Ÿ‡ง๐Ÿ‡ง BarbadosHigh Risk
๐Ÿ‡ง๐Ÿ‡พ BelarusHigh Risk
๐Ÿ‡ง๐Ÿ‡ฟ BelizeHigh Risk
๐Ÿ‡ง๐Ÿ‡ด BoliviaHigh Risk
๐Ÿ‡ง๐Ÿ‡ฆ Bosnia and HerzegovinaHigh Risk
๐Ÿ‡ง๐Ÿ‡ซ Burkina FasoHigh Risk
๐Ÿ‡ง๐Ÿ‡ฎ BurundiHigh Risk
๐Ÿ‡จ๐Ÿ‡ซ Central African RepublicHigh Risk
๐Ÿ‡น๐Ÿ‡ฉ ChadHigh Risk
๐Ÿ‡ฐ๐Ÿ‡ฒ ComorosHigh Risk
๐Ÿ‡จ๐Ÿ‡ฉ Congo (Democratic Rep Of)High Risk
๐Ÿ‡จ๐Ÿ‡ฌ Congo (People's Rep Of)High Risk
๐Ÿ‡จ๐Ÿ‡บ CubaHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ถ Equatorial GuineaHigh Risk
๐Ÿ‡ช๐Ÿ‡ท EritreaHigh Risk
๐Ÿ‡ช๐Ÿ‡น EthiopiaHigh Risk
๐Ÿ‡ซ๐Ÿ‡ฏ FijiHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ฆ GabonHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ฒ GambiaHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ช GeorgiaHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ณ Republic of GuineaHigh Risk
๐Ÿ‡ฌ๐Ÿ‡ผ Guinea BissauHigh Risk
๐Ÿ‡ญ๐Ÿ‡น HaitiHigh Risk
๐Ÿ‡ฎ๐Ÿ‡ท IranHigh Risk
๐Ÿ‡ฎ๐Ÿ‡ถ IraqHigh Risk
๐Ÿ‡ฐ๐Ÿ‡ฟ KazakhstanHigh Risk
๐Ÿ‡ฐ๐Ÿ‡ฌ KyrgyzstanHigh Risk
๐Ÿ‡ฑ๐Ÿ‡ฆ LaosHigh Risk
๐Ÿ‡ฑ๐Ÿ‡ง LebanonHigh Risk
๐Ÿ‡ฑ๐Ÿ‡ท LiberiaHigh Risk
๐Ÿ‡ฑ๐Ÿ‡พ LibyaHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ฌ MadagascarHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ผ MalawiHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ป MaldivesHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ฑ MaliHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ญ Marshall IslandsHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ท MauritaniaHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ฉ MoldovaHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ณ MongoliaHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ช MontenegroHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ฟ MozambiqueHigh Risk
๐Ÿ‡ฒ๐Ÿ‡ฒ Myanmar (Burma)High Risk
๐Ÿ‡ณ๐Ÿ‡ท NauruHigh Risk
๐Ÿ‡ณ๐Ÿ‡ต NepalHigh Risk
๐Ÿ‡ณ๐Ÿ‡ฎ NicaraguaHigh Risk
๐Ÿ‡ณ๐Ÿ‡ช NigerHigh Risk
๐Ÿ‡ณ๐Ÿ‡ฌ NigeriaHigh Risk
๐Ÿ‡ฐ๐Ÿ‡ต North KoreaHigh Risk
๐Ÿ‡ต๐Ÿ‡ฐ PakistanHigh Risk
๐Ÿ‡ต๐Ÿ‡ฌ Papua New GuineaHigh Risk
๐Ÿ‡ท๐Ÿ‡บ RussiaHigh Risk
๐Ÿ‡ธ๐Ÿ‡จ SeychellesHigh Risk
๐Ÿ‡ธ๐Ÿ‡ฑ Sierra LeoneHigh Risk
๐Ÿ‡ธ๐Ÿ‡ง Solomon IslandsHigh Risk
๐Ÿ‡ธ๐Ÿ‡ด SomaliaHigh Risk
๐Ÿ‡ธ๐Ÿ‡ธ South SudanHigh Risk
๐Ÿ‡ฑ๐Ÿ‡ฐ Sri LankaHigh Risk
๐Ÿ‡ธ๐Ÿ‡ฉ SudanHigh Risk
๐Ÿ‡ธ๐Ÿ‡ท SurinameHigh Risk
๐Ÿ‡ธ๐Ÿ‡พ SyriaHigh Risk
๐Ÿ‡น๐Ÿ‡ฏ TajikistanHigh Risk
๐Ÿ‡น๐Ÿ‡ฑ Timor LesteHigh Risk
๐Ÿ‡น๐Ÿ‡ฌ TogoHigh Risk
๐Ÿ‡น๐Ÿ‡ด TongaHigh Risk
๐Ÿ‡น๐Ÿ‡ณ TunisiaHigh Risk
๐Ÿ‡น๐Ÿ‡ฒ TurkmenistanHigh Risk
๐Ÿ‡บ๐Ÿ‡ฆ UkraineHigh Risk
๐Ÿ‡บ๐Ÿ‡ฟ UzbekistanHigh Risk
๐Ÿ‡ป๐Ÿ‡ช VenezuelaHigh Risk
๐Ÿ‡พ๐Ÿ‡ช YemenHigh Risk
๐Ÿ‡ฟ๐Ÿ‡ฒ ZambiaHigh Risk
๐Ÿ‡ฟ๐Ÿ‡ผ ZimbabweHigh Risk

Authoritarian rule has gripped Afghanistan, with the Taliban seeing its one-year anniversary of rule. Argentina, also at high risk, faces over 70% annual increases in inflation which could rise as much as 100% by year-end.

After the invasion of Ukraine, Russiaโ€™s risk was moved to the highest level. Despite sweeping sanctions across the ninth-largest economy in the world, GDP is projected to fall -3.4%.

Weathering the Storm

Despite often facing their own challenges, many countries continue to be deemed to have low macroeconomic risk. Several of these are in Europe, Asia, and smaller island jurisdictions, in addition to North America.

CountryRisk Level
๐Ÿ‡ฆ๐Ÿ‡ธ American SamoaLow Risk
๐Ÿ‡ฆ๐Ÿ‡ฉ AndorraLow Risk
๐Ÿ‡ฆ๐Ÿ‡ถ AntarcticaLow Risk
๐Ÿ‡ฆ๐Ÿ‡บ AustraliaLow Risk
๐Ÿ‡ฆ๐Ÿ‡น AustriaLow Risk
๐Ÿ‡ง๐Ÿ‡ช BelgiumLow Risk
๐Ÿ‡ง๐Ÿ‡ฒ BermudaLow Risk
๐Ÿ‡ป๐Ÿ‡ฌ British Virgin IslandsLow Risk
๐Ÿ‡จ๐Ÿ‡ฆ CanadaLow Risk
๐Ÿ‡ง๐Ÿ‡ถ Caribbean NetherlandsLow Risk
๐Ÿ‡ฐ๐Ÿ‡พ Cayman IslandsLow Risk
๐Ÿ‡จ๐Ÿ‡ฝ Christmas IslandLow Risk
๐Ÿ‡จ๐Ÿ‡จ Cocos (Keeling) IslandsLow Risk
๐Ÿ‡จ๐Ÿ‡ฟ Czech RepublicLow Risk
๐Ÿ‡ฉ๐Ÿ‡ฐ DenmarkLow Risk
๐Ÿ‡ช๐Ÿ‡ช EstoniaLow Risk
๐Ÿ‡ซ๐Ÿ‡ฐ Falkland IslandsLow Risk
๐Ÿ‡ซ๐Ÿ‡ด Faroe IslandsLow Risk
๐Ÿ‡ซ๐Ÿ‡ฎ FinlandLow Risk
๐Ÿ‡ฌ๐Ÿ‡ซ French GuianaLow Risk
๐Ÿ‡ซ๐Ÿ‡ท FranceLow Risk
๐Ÿ‡น๐Ÿ‡ซ French Southern TerritoryLow Risk
๐Ÿ‡ฉ๐Ÿ‡ช GermanyLow Risk
๐Ÿ‡ฌ๐Ÿ‡ฎ GibraltarLow Risk
๐Ÿ‡ฌ๐Ÿ‡ฑ GreenlandLow Risk
๐Ÿ‡ฌ๐Ÿ‡ต GuadeloupeLow Risk
๐Ÿ‡ฌ๐Ÿ‡บ GuamLow Risk
๐Ÿ‡ญ๐Ÿ‡ฒ Heard and McDonald IslandsLow Risk
๐Ÿ‡ฎ๐Ÿ‡ช IrelandLow Risk
๐Ÿ‡ฎ๐Ÿ‡น ItalyLow Risk
๐Ÿ‡ฏ๐Ÿ‡ต JapanLow Risk
๐Ÿ‡ฑ๐Ÿ‡ป LatviaLow Risk
๐Ÿ‡ฑ๐Ÿ‡ฎ LiechtensteinLow Risk
๐Ÿ‡ฑ๐Ÿ‡น LithuaniaLow Risk
๐Ÿ‡ฑ๐Ÿ‡บ LuxembourgLow Risk
๐Ÿ‡ฒ๐Ÿ‡น MaltaLow Risk
๐Ÿ‡ฒ๐Ÿ‡จ MonacoLow Risk
๐Ÿ‡ฒ๐Ÿ‡ถ MartiniqueLow Risk
๐Ÿ‡พ๐Ÿ‡น MayotteLow Risk
๐Ÿ‡ณ๐Ÿ‡ฑ NetherlandsLow Risk
๐Ÿ‡ณ๐Ÿ‡จ New CaledoniaLow Risk
๐Ÿ‡ณ๐Ÿ‡ฟ New ZealandLow Risk
๐Ÿ‡ณ๐Ÿ‡ซ Norfolk IslandLow Risk
๐Ÿ‡ฒ๐Ÿ‡ต Northern Mariana IslandsLow Risk
๐Ÿ‡ณ๐Ÿ‡ด NorwayLow Risk
๐Ÿ‡ต๐Ÿ‡ณ Pitcairn IslandsLow Risk
๐Ÿ‡ท๐Ÿ‡ช ReunionLow Risk
๐Ÿ‡ธ๐Ÿ‡ฒ San MarinoLow Risk
๐Ÿ‡ธ๐Ÿ‡ฌ SingaporeLow Risk
๐Ÿ‡ธ๐Ÿ‡ฐ SlovakiaLow Risk
๐Ÿ‡ฌ๐Ÿ‡ธ South Georgia/Sandwich IslandsLow Risk
๐Ÿ‡ฐ๐Ÿ‡ท South KoreaLow Risk
๐Ÿ‡ช๐Ÿ‡ธ SpainLow Risk
๐Ÿ‡ธ๐Ÿ‡ญ St HelenaLow Risk
๐Ÿ‡ต๐Ÿ‡ฒ St. Pierre Et MiquelonLow Risk
๐Ÿ‡ธ๐Ÿ‡ฏ Svalbard & Jan MayenLow Risk
๐Ÿ‡ธ๐Ÿ‡ช SwedenLow Risk
๐Ÿ‡จ๐Ÿ‡ญ SwitzerlandLow Risk
๐Ÿ‡น๐Ÿ‡ผ TaiwanLow Risk
๐Ÿ‡น๐Ÿ‡ฐ TokelauLow Risk
๐Ÿ‡น๐Ÿ‡จ Turks & CaicosLow Risk
๐Ÿ‡ฌ๐Ÿ‡ง United KingdomLow Risk
๐Ÿ‡บ๐Ÿ‡ธ United StatesLow Risk
๐Ÿ‡ป๐Ÿ‡ฎ U.S. Virgin IslandsLow Risk
๐Ÿ‡ป๐Ÿ‡ฆ Vatican CityLow Risk
๐Ÿ‡ผ๐Ÿ‡ซ Wallis & FutunaLow Risk

Although Taiwan faces increased tensions with China, risk remains low due to strong institutions and a stable multiparty democracy. Still, Chinaโ€™s aim to govern the country could intensify and become more explicit.

Additionally, the United Kingdom has faced growing market instability after bold tax-cut announcements which were later abandoned. Investors have grown uneasy, illustrated by the fall in the sterling and rising gilt yields, the yields on their government bonds.

In the U.S., rising interest rates could likely place added risk on corporate debt.

Today, U.S. corporate debt stands at 80% of GDP, up from 67% in 2007. Roughly a third of this debt falls within the lowest investment-grade level, BBB. However, reforms that followed the Global Financial Crisis required banks to follow stricter capital requirements, which has put regulated institutions in a stronger position to withstand market turmoil.

Future Risks

With these factors in mind, the chart below looks at the top 10 geopolitical risks looking ahead, according to risk consulting firm Kroll.

Geopolitical Risks

The risk of Russia entirely cutting off gas supplies to Europe could present increasing challenges, especially into 2023 and 2024. This year, Russiaโ€™s gas supplies to Europe have reduced by half, causing energy prices to hit record highs. The energy crunch has precipitated corporate bailouts, including one of the highest in Germanyโ€™s history.

Global food insecurity could also accelerate if a supply crunch worsens. Russia and Ukraine supply 10% of the worldโ€™s calories and provide 26 countries with at least half of their grain products.

Another potential risk is the trend towards deglobalization. While this can be difficult to measure, some data points towards this shift. Over the past few years, world trade to GDP has stagnated after rising for several decades.

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Markets in a Minute

What is the Success Rate of Actively Managed Funds?

For actively managed funds, the odds of beating the market over the long run are like finding a needle in a haystack.

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Actively Managed Funds

What is the Success Rate of Actively Managed Funds?

Over a 20-year period, 95% of large-cap actively managed funds have underperformed their benchmark.

The above graphic shows the performance of actively managed funds across a range of fund types, using data from S&P Global via Charlie Bilello.

Missing the Mark: Actively Managed Funds

Several factors present headwinds to actively managed funds.

  • Trading costs: First, fund managers will trade more often than passive funds. These in turn incur costs, impacting returns.
  • Cash holdings: Additionally, many of these funds hold a cash allocation of about 5% or more to capture market opportunities. Unlike active funds, their passive counterparts are often fully invested. Cash holdings can have the opposite effect than intendedโ€”dragging on overall returns.
  • Fees: Active funds can charge up to 1-2% in investment manager fees while funds that tracked an index passively charged just 0.12% on average in 2022. These additional costs add up over time.

Below, we show how active funds increasingly underperform against their benchmark over each time period.

Fund Type1 Year
% Underperformed
5 Year
% Underperformed
10 Year
% Underperformed
20 Year
% Underperformed
All Large-Cap 51879195
All Small-Cap 57718994
Large-Cap Growth 74869698
Large-Cap Value 59698587
Small-Cap Growth 80598597
Small-Cap Value 41819192
Real Estate 88627487

As we can see, 51% of all large-cap active mutual funds underperformed in a one-year period. That compares to 41% of small-cap value funds, which had the best chance of outperforming the benchmark annually. Also, an eye-opening 88% of real estate funds underperformed.

For context, Warren Buffettโ€™s firm Berkshire Hathaway has beat the S&P 500 two-thirds of the time. Even the worldโ€™s top stock pickers have a hard time beating the marketโ€™s returns.

2020 Market Crash: A Case Study

How about active fundsโ€™ performance during a crisis?

While the case for actively managed funds is often stronger during a market downturn, a 2020 study shows how they continued to underperform the index.

Overall, 74% of over 3,600 active funds with $4.9 trillion in assets did worse than the S&P 500 during the 2020 market plunge.

Stage of 2020 CycleTime Period% Underperforming S&P 500
CrisisFeb 20 - Apr 30, 202074.2
CrashFeb 20 - Mar 23, 202063.5
RecoveryMar 24 - Apr 30, 202055.8
Pre-CrisisOct 1 2019 - Jan 31, 202067.1

Source: NBER

In better news, roughly half underperformed through the recovery, the best out of any market condition that was studied.

The Bigger Impact

Of course, some actively managed funds outperform.

Still, choosing the top funds year after year can be challenging. Also note that active fund managers typically only run a portfolio for four and a half years on average before someone new takes over, making it difficult to stick with a star manager for very long.

As lower returns accumulate over time, the impact of investing in active mutual funds can be striking. If an investor had a $100,000 portfolio and paid 2% in costs every year for 25 years, they would lose about $170,000 to fees if it earned 6% annually.

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Markets in a Minute

Ranked: The Largest Bond Markets in the World

The global bond market stands at $133 trillion in value. Here are the major players in bond markets worldwide.

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The Largest Bond Markets in the World

The Largest Bond Markets in the World

In 2022, the global bond market totaled $133 trillion.

As one of the worldโ€™s largest capital markets, debt securities have grown sevenfold over the last 40 years. Fueling this growth are government and corporate debt sales across major economies and emerging markets. Over the last three years, Chinaโ€™s bond market has grown 13% annually.

Based on estimates from the Bank for International Statements, this graphic shows the largest bond markets in the world.

โ„น๏ธ Total debt numbers here include both domestic and international debt securities in each particular country or region. BIS notes that international debt securities are issued outside the local market of the country where the borrower resides and cover eurobonds as well as foreign bonds, but exclude negotiable loans.

Ranked: The World’s Top Bond Markets

Valued at over $51 trillion, the U.S. has the largest bond market globally.

Government bonds made up the majority of its debt market, with over $26 trillion in securities outstanding. In 2022, the Federal government paid $534 billion in interest on this debt.

China is second, at 16% of the global total. Local commercial banks hold the greatest share of its outstanding bonds, while foreign ownership remains fairly low. Foreign interest in Chinaโ€™s bonds slowed in 2022 amid geopolitical tensions in Ukraine and lower yields.

Bond Market RankCountry / RegionTotal Debt OutstandingShare of Total Bond Market
1๐Ÿ‡บ๐Ÿ‡ธ U.S.$51.3T39%
2๐Ÿ‡จ๐Ÿ‡ณ China$20.9T16%
3๐Ÿ‡ฏ๐Ÿ‡ต Japan$11.0T8%
4๐Ÿ‡ซ๐Ÿ‡ท France$4.4T3%
5๐Ÿ‡ฌ๐Ÿ‡ง United Kingdom$4.3T3%
6๐Ÿ‡จ๐Ÿ‡ฆ Canada$4.0T3%
7๐Ÿ‡ฉ๐Ÿ‡ช Germany$3.7T3%
8๐Ÿ‡ฎ๐Ÿ‡น Italy$2.9T2%
9๐Ÿ‡ฐ๐Ÿ‡พ Cayman Islands*$2.7T2%
10๐Ÿ‡ง๐Ÿ‡ท Brazil*$2.4T2%
11๐Ÿ‡ฐ๐Ÿ‡ท South Korea*$2.2T2%
12๐Ÿ‡ฆ๐Ÿ‡บ Australia$2.2T2%
13๐Ÿ‡ณ๐Ÿ‡ฑ Netherlands$1.9T1%
14๐Ÿ‡ช๐Ÿ‡ธ Spain$1.9T1%
15๐Ÿ‡ฎ๐Ÿ‡ณ India*$1.3T1%
16๐Ÿ‡ฎ๐Ÿ‡ช Ireland$1.0T1%
17๐Ÿ‡ฒ๐Ÿ‡ฝ Mexico*$1.0T1%
18๐Ÿ‡ฑ๐Ÿ‡บ Luxembourg$0.9T1%
19๐Ÿ‡ง๐Ÿ‡ช Belgium$0.7T>1%
20๐Ÿ‡ท๐Ÿ‡บ Russia*$0.7T>1%

*Represent countries where total debt securities were not reported by national authorities. These figures are the sum of domestic debt securities reported by national authorities and/or international debt securities compiled by BIS.
Data as of Q3 2022.

As the above table shows, Japan has the third biggest debt market. Japanโ€™s central bank owns a massive share of its government bonds. Central bank ownership hit a record 50% as it tweaked its yield curve control policy that was introduced in 2016. The policy was designed to help boost inflation and prevent interest rates from falling. As inflation began to rise in 2022 and bond investors began selling, it had to increase its yield to spur demand and liquidity. The adjustment sent shockwaves through financial markets.

In Europe, France is home to the largest bond market at $4.4 trillion in total debt, surpassing the United Kingdom by roughly $150 billion.

Banks: A Major Buyer in Bond Markets

Like central banks around the world, commercial banks are key players in bond markets.

In fact, commercial banks are among the top three buyers of U.S. government debt. This is because commercial banks will reinvest client deposits into interest-bearing securities. These often include U.S. Treasuries, which are highly liquid and one of the safest assets globally.

As we can see in the chart below, the banking sector often surpasses an economy’s total GDP.

Banking Sector

As interest rates have risen sharply since 2022, the price of bonds has been pushed down, given their inverse relationship. This has raised questions about what type of bonds banks hold.

In the U.S., commercial banks hold $4.2 trillion in Treasury bonds and other government securities. For large U.S. banks, these holdings account for almost 24% of assets on average. They make up an average 15% of assets for small banks in 2023. Since mid-2022, small banks have reduced their bond holdings due to interest rate increases.

As higher rates reverberate across the banking system and wider economy, it may expose further strains on global bond markets which have expanded rapidly in an era of dovish monetary policy and ultra-low interest rates.

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