Odd Lots Why Interest Rates Are Shooting Up All Around the World
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May 22, 2025 
Steven Englander, the global head of G-10 FX research at Standard Chartered, dives into the recent surge in global interest rates, particularly highlighting the spike in Japanese government bonds. He discusses how a weakening dollar impacts the U.S. economy and dissect the complex dynamics of fiscal policies. The conversation touches on the 'sell America' narrative, investor concerns in uncertain markets, and the challenges central banks face during stagflation. Englander emphasizes the need for innovative approaches to tackle these economic hurdles.
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Global Bond Yield Rise Complexity
- Rising global bond yields show a complex dynamic beyond just local fiscal policy.
- Japan's yield rise reflects uncertainty in QT pace, while US rates rise amidst fiscal concerns and inflation worries.
Complexity of Dollar Weakness
- A weaker US dollar often signals economic concerns rather than just competitiveness gains.
- Good reasons for dollar weakness include foreign fiscal expansions; bad reasons indicate risk premium hikes or policy uncertainty.
Capital Flows Trump Trade Balancing
- Exchange rates in practice are driven mainly by capital flows, not only trade and PPP.
- The US historically absorbed trade deficits without harming economic welfare because markets trusted its financial returns.