“World governments are issuing more debt than ever,” commented the Kobeissi Letter over the weekend.
Global sovereign bond issuances hit a record $18 trillion last year, with developed countries responsible for a staggering $16 trillion of that total. This surge in debt underscores a concerning trend: global government bond issuance has nearly doubled since 2019, placing nations on an unsustainable debt trajectory.
“Historically high public spending on social programs and defense, new tax and spending policies, as well as elevated interest rates, have been behind this massive surge.”
World governments are issuing more debt than ever:
Global sovereign bond issuances hit a record ~$18 TRILLION in 2024.
~$16 trillion of debt was issued by developed countries, and ~$2 trillion by emerging market economies.
World government bond issuance has nearly DOUBLED… pic.twitter.com/X0QxXwtdIo
— The Kobeissi Letter (@KobeissiLetter) June 7, 2025
More Debt, More Bonds
Government bonds serve as a key mechanism for nations to raise capital, allowing them to issue interest-bearing debt securities to finance public expenditures. However, with debt levels soaring, there is an increasing necessity to refinance, which subsequently demands a higher number of bond buyers and intensifies pressure on the bond markets.
As reported by the Financial Times on June 6, investor interest in long-term government debt is waning. Recent auctions of 20-year bonds in both Japan and the US faced tepid demand, leading to significant price declines and rising yields. Prominent investors, including Larry Fink of BlackRock and billionaire hedge fund manager Ray Dalio, have voiced concerns regarding unsustainable deficits, particularly in the US, which is contemplating a $2.4 trillion increase in debt. Such moves have sparked fears of a potential path to insolvency.
Long-term bond yields typically serve as benchmarks for corporate borrowing. Rising yields can significantly raise the cost of borrowing for businesses, posing risks to economic growth. Furthermore, a debt market that is increasingly dominated by hedge funds and short-term investors may lead to heightened volatility.
Bitcoin: A Potential Beneficiary
In the midst of these challenges, store-of-value assets like Bitcoin may experience a resurgence in interest due to the ongoing strain in the global bond market and a growing distrust in government debt. Should government bonds lose their appeal due to high yields, poor auction outcomes, and credit downgrades, many investors may look for alternatives to safeguard their capital.
Moreover, governments might increasingly depend on inflation as a strategy to diminish the real value of debt. In this context, Bitcoin’s reputation as an inflation hedge could be further solidified. Distinct from conventional government securities, Bitcoin offers a decentralized financial system that remains insulated from political manipulation or debt monetization.
As nations and investors diversify their portfolios away from US Treasuries and the dollar, Bitcoin stands poised to become an integral component of a new neutral reserve asset basket, particularly in developing economies. At the time of writing, Bitcoin stabilized at around $105,500, recovering from its recent dip to $101,000 and reflecting a more than 50% gain over the previous year.
The discussion surrounding the rising levels of sovereign debt and its broader economic implications continues to evolve. The potential rise of alternative assets like Bitcoin underscores the importance of adaptability and resilience in investment strategies.
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