Andrew Sheng is a former central banker and financial regulator, currently distinguished fellow at the Asia Global Institute, University of Hong Kong.
We’ve never had it so good. The S&P 500 and Nikkei 225 have hit record highs this month. SpaceX had its spectacular initial public offering , the largest in history. The company raised an eye-popping US$75 billion and saw a sharp rise in its share price to a mind-blowing valuation of US$2.5 trillion in two days. The US-Iran deal on reopening the Strait of Hormuz caused petrol prices to drop back to below US$4 per gallon.
Global stock markets are creating seemingly unstoppable wealth for investors. Last month, bull investor Ed Yardeni raised his year-end S&P 500 Index target from 7,700 to 8,250. US companies are still recording bumper profits, driven by artificial intelligence (AI), financial and consumer giants.
Let’s connect some dots in the boom or bust noise that could cast doubt on market enthusiasm.
First, the doomsayers are flagging warning signals. According to the World Bank’s projections, global gross domestic product growth will slow to 2.5 per cent in 2026, down from 2.9 per cent last year, mainly due to the conflict in the Middle East and higher oil prices. Economist Steve Hanke has drawn attention to debt levels and monetary policy in advanced economies, saying warning signs are flashing red.
On Wednesday, the US Federal Open Market Committee under its new chairman Kevin Warsh held the federal funds rate at the current 3.5-3.75 per cent range, but took what appeared to be a hawkish stance on maintaining price stability amid strong productivity growth.
With 30-year US Treasuries yield hovering around 5 per cent per annum, even as consumer prices spiked to 4.2 per cent in May, the average interest cost of the US’ US$39 trillion in sovereign debt is roughly 3.4 per cent per annum or around US$1 trillion. At the end of last year, interest payments were nearly 19 per cent of federal revenue.
Read the full article at South China Morning Post →📄Source document: World Bank's projections
1 reports
South China Morning PostParty-alignedCenter2 days agoThe article discusses recent economic developments, including record highs in major stock indices like the S&P 500 and Nikkei 225, SpaceX's historic IPO, and fluctuations in oil prices following the US-Iran deal. It highlights the current optimism in global markets but also raises concerns about potential risks such as slowing GDP growth, rising debt levels, and monetary policy challenges.
Bias read (Center): The article presents both positive developments in global markets and cautionary warnings from economists and institutions like the World Bank. It does not exhibit overtly biased language, one-sided sourcing, or editorializing favoring any particular political stance. The tone remains analytical and
Official sources cited
- government World Bank's projections
- other Steve Hanke
