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Macquarie strategists warn that sharp, rapid movements in long-term bond yields have preceded nearly every major financial blowup over the past five decades, a pattern they argue poses a specific risk beyond simply higher borrowing costs.
The firm contends that the speed and magnitude of yield shifts, rather than the level alone, trigger "balance sheet-induced mini-crises" that can lead to institutional collapse.
Thierry Wizman and Gareth Berry, global strategists at Macquarie, noted in a report on Wednesday that sharp increases or decreases in long-term yields have occurred every few years for the last 50 years.
In each instance, they wrote, a financial company or heavy borrower subsequently imploded. This dynamic creates a direct and self-reinforcing causal connection between bond market stress and broader economic disruption.
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