George Gammon notes debt to GDP inverse to 10y yields

George Gammon notes debt to GDP inverse to 10y yields
@GeorgeGammon: Debt to GDP inverse to yields

George Gammon provides an analysis on the relationship between debt to GDP and 10-year yields. He points out that the chart shows a high inverse correlation, implying that as debt to GDP rises, 10-year yields tend to decrease.

Gammon suggests that factors such as growth and inflation play a more significant role than debt and deficits, which is why the 10-year yield is down year-to-date, contrary to widespread expectations of rising rates.

Gammon’s observations on the interplay between macroeconomic variables and bond yields align with broader themes in recent financial discourse. Notably, the dissonance between rising debt levels and subdued long-term rates recalls his previous focus on the dramatic changes within the banking system, such as the substantial surge in bank reserves since 2007, which challenged prevailing assumptions about liquidity and monetary policy constraints.

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