THE LONG VIEW

Dambisa Moyo

Three major trends are upending financial markets, encouraging a greater risk-on mentality.

HREE MAJOR TRENDS ARE UPENDING FINANCIAL MARKETS, encouraging a greater risk-on mentality, and shaping how investors earmark capital, position their portfolios, and ultimately create market winners and losers.

The first trend concerns the underlying structure of global debt markets, specifically the amount of outstanding debt, the maturity and duration of bonds, and the holders of such debt. According to the International Monetary Fund, global debt breached $ 100 trillion at the end of 2024 and is projected to approach 100 % of global GDP by 2030, compared to 90 % before the Covid-19 pandemic.

Already, debt-to-GDP ratios exceed 100 % in developed countries such as the United States, Canada, Japan, Italy, France, Spain and the United Kingdom. U. S. public debt is at unprecedented levels and continues to rise, with interest payments now exceeding defense spending.

While U. K. government debt is rising by £ 428 million($ 673 million) per day, French government debt rose by more than € 750 million($ 871 million) per day in the second quarter of 2025. Moreover, the outstanding debt from student loans, car loans, and credit cards has risen above $ 1 trillion for each class. In the case of U. S. student loans, cracks are showing, with more than nine million borrowers missing at least one payment in 2025.

Meanwhile, debt duration and maturities are getting shorter as the U. S., the U. K. and Japan resort to shorter-term financing to keep their interest payments down, respond to investor demand, and stay fiscally afloat. After slashing sales of long-dated bonds to record lows in 2025, the U. K. is considering expanding its market for ultra-short-dated bills. In the U. S., 60 % of the new debt raised by

Globally, U. S. equities remain best positioned to lead and capitalize on the AI and energy-transition supercycles, both of which are still in their early stages. the government between July and October of last year came from T-bills. The worry now is that this approach will expose both governments to potentially costly interest-rate swings when debts need to be rolled over.

There have also been notable shifts in who is holding government debt. For example, although China has been trimming its holdings of U. S. debt, it remains the second-largest foreign lender to the U. S. government, with some $ 700 billion in Treasury bonds. As geopolitical tensions between the two countries rise, it will be reasonable to ask how much leverage over the U. S. this gives China. Similarly, one-third of U. K. gilts are held by overseas investors— the highest share in the G7— which speaks to a source of growing vulnerability.

Finally, central banks have slowed their purchases of U. S. Treasurys and even started selling the bonds they bought as part of the stimulus programs following the 2008 and 2020 crises. According to the Bank for International Settlements, hedge funds and other investment firms have been filling the void. But since hedge funds often use leverage to generate higher returns on their trades, this shift brings greater risk into the U. S. Treasury market.

Given these trends, sovereign debt and fiat currencies will be the likely losers( in terms of returns), while hard assets like gold and silver will be winners, as they were in the second half of 2025. After all, the increase in sovereign liabilities raises

MAY / JUNE 2026 | FINANCIAL ADVISOR MAGAZINE | 21