Page 40 - Nuvama | IC Report 2023

• DE-GLOBALISATION • DEREGULATION • DEBT • DEMOGRAPHY • DEMOCRACY

Financial instability risks: Are safe havens safe enough?
Finally, amid such high debt, financial instability risks cannot be ruled out. In the western world,
governments are highly levered. In the US, government debt to GDP reached nearly 120%
post-pandemic, highest since WW2.

135
Exhibit 8:
Current US
government debt 120% of GDP, World War II ~120% of GDP, current
comparable to 110
post-WW2

85
(%)
60

35

10
1922 1942 1962 1982 2002 2022
US government debt to GDP (%)

Exhibit 9: 30
2022 was one
of the worst years 25
for safe-haven
US treasuries
20
15
(%)
10

5
0

-5
At all time low
-10
-15
Dec ‘74 Dec ‘82 Dec ‘90 Dec ‘98 Dec ‘06 Dec ‘14 Dec ‘22
Annual US Treasury bond returns
Source: BIS, Bloomberg, Nuvama Research

38