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Global Government

Bond Markets in Focus

In the second half of 2020, government
bonds being made available for lending
initially stagnated at around the €3
trillion level for the first three months.
Available balances then increased to
just over €3.2 trillion, only to fall away
into the year-end, closing at just over
€3.1 trillion on 31 December

As we look at how markets have reacted to the pandemic, These often conflicting macroeconomic levers can make
any analysis of the government bond markets needs to be it difficult to draw concrete conclusions for securities
done within the context of the significant interventions financing markets, but their impacts will drive government
from governments and national central banks, both in bond lending more than any other asset class.
the form of new issuance by the former to fund their
various support packages, as well as quantitative easing In the second half of 2020, government bonds being
by the latter. A low interest rate environment will also made available for lending initially stagnated at around
change behavior and outcomes, as reduced yields will the €3 trillion level for the first three months. Available
restrict cash collateral opportunities and possibly drive balances then increased to just over €3.2 trillion, only
participants to look at other sources of liquidity such as to fall away into the year-end, closing at just over €3.1
the unsecured markets. trillion on 31 December.

Fig 8: Global Securities Lending Government Bond Market Source: IHS Markit

€3.5T €1.2T

Total Lendable Assets €3.2T €1T On-Loan Balance

€2.9T €0.8T
Jun 20 July 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20
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