Fixed Income Securities, 4th Edition

CHAPTER 0Overview

0.1 GLOBAL FIXED INCOME MARKETS

Fixed income markets are large and global. Figure 0.1 shows the outstanding amounts of debt securities, by residence of issuer. Debt securities are instruments designed to be traded, like bonds issued by corporations or by governments. Grouping by residence of issuer means, for example, that US Treasury bonds held by China's central bank are included in the total for the United States. As of March 2021, the global total of outstanding debt securities was about $123 trillion. For reference, the total capitalization of global equity markets at the time was $110 trillion, although stock market values are significantly more volatile.

Figure 0.1 shows that the five largest issuers, in terms of amounts outstanding, are in the United States, the Eurozone, China, Japan, and the United Kingdom, which together comprise nearly 90% of the total. The Eurozone includes countries that both belong to the European Union (EU) and use the euro as a national currency. Some individual members of the Eurozone, indicated with asterisks in the figure, are significant issuers of debt securities on their own. Note that the figure displays their amounts outstanding with gray bars, but their contributions to the cumulative total are included once, with the Eurozone total.

Figure 0.2 decomposes debt outstanding in the five largest regions by sector. The large fraction of government debt in Japan reflects decades of government borrowing and spending intended ...