Fixed-income: What is fiscal dominance and why is it important?

Today's episode is about a concept called fiscal dominance which is when the fiscal policies begin to dominate the monetary policy. Under conditions of high debt levels and rising interest rates it can create a negative feedback loop in inflation and interest rates potentially leading to sustained negative real rates and fiscal repression. We also talk about yesterday's 20-year Treasury auction and how the market response might indicate that the market is pricing in a slightly more hawkish Fed, with Peter Garnry and Althea Spinozzi. Read daily in-depth market updates from the Saxo Market Call and SaxoStrats Market Strategy Team here. Click here to open an account with Saxo