The World Debt Situation Has Become More Unstable, Octa Broker warns

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Media Outreach
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KUALA LUMPUR, MALAYSIA – Media OutReach Newswire – 30 May 2025 – Traders and investors alike are unnerved by the recent turbulence in the bond markets. After Moody’s—a major rating agency—downgraded U.S. government debt on 16 May, and Japanese long-term bond yields soared to multi-decade highs, some market participants started to fear that the world may be on the verge of a major debt crisis. Meanwhile, the yield on 20-year UK government bonds neared 5.5%, a level not seen in 27 years, as investors grew more worried about the extent of Chancellor Rachel Reeves’ borrowing plans. Octa Brokers looks at the potential implications of these developments for global markets.

Source: LSEG

Kar Yong Ang comments: ‘Policy uncertainty is all over the place. Tariffs, tax bill, debt ceiling. No wonder investors charge a premium for holding the debt of a country, which is not in a ‘triple-A club’ anymore. Investors want higher yield in order to provide long-term lending in the current uncertain climate’.

Indeed, the U.S. government actually hit its legal borrowing limit back in January and has been using special procedures to avoid exceeding it and potentially defaulting. However, these measures are expected to run out around late August or early September, at which point the government might be unable to meet all its financial commitments.

Yields of government bonds with the longest maturities have been rising sharply not just in the United States but also in Japan and the United Kingdom (UK) (see chart below). On 20 May, Japan’s 20-year government bond (JGB) auction had its worst results since 2012. The demand was weak, with the bid-to-cover ratio dropping to 2.50, while the lowest accepted price was just ¥98.15, some 2% below the expected price.

Yields on 20-Year Government Bonds
Octa is an international CFD broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 52 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools.

The company is involved in a comprehensive network of charitable and humanitarian initiatives, including improving educational infrastructure and funding short-notice relief projects to support local communities.

In Southeast Asia, Octa received the ‘Best Trading Platform Malaysia 2024’ and the ‘Most Reliable Broker Asia 2023’ awards from Brands and Business Magazine and International Global Forex Awards, respectively.