Episode 410: Sovereign Debt And The Geopolitics of Finance

Global markets are sending some extraordinary signals right now with guaranteed borrowing costs surging. Bond yields at their highest levels that we haven’t seen in decades and geopolitical tensions that honestly are starting to reshape some capital flows. But what does this mean for the world? What does it mean for the markets, for the world’s safest bonds and for global risk as this is going on? 

In this episode Dominic sits down with Ka Lok (Steve) Wong, a macroeconomist at the United Nations Economic Commission for Africa. The conversation starts at borrowing costs and its implications for the international economy, and spans into oil prices, market confidence, and potential economic shocks on our horizons. 

But the conversation isn’t purely economic. The discussion goes further. Delving into topics such as the African Premium, a possible AI bubble, and whether the middle class is necessity, Ka Lok’s expansive knowledge on emerging economies makes for an enlightening listen. With this in mind: 

When does the AI investment boom stop creating value and start destroying capital? And what is the bond market actually warning us about?

Ka Lok Wong’s Research is provided below:

1. Emerging Economies borrowing patterns at the higher expected US interest rates – https://doi.org/10.1093/oxrep/grag025 
2. African Domestic Market Development – https://cepr.org/publications/dp20747
3. Africa’s Domestic Debt: Balancing Resilience and Vulnerability (in BIS Editorial preparation, no public link yet) with Michael Chui, Leonardo Gambacorta, Ugo Panizza, and Niccolò Rescia ; for the risk shifting in African sovereign borrowing