New York Life Investments Unpacks Sovereign Risk, Investment Implications, and the Future of Global Debt Management

“Trust or bust: the next era of global debt sustainability” reveals how sovereign debt decisions will reshape global markets and drive long-term investment outcomes

New York Life Investments today released the third annual installment of their Megatrends research, titled “Trust or bust: the next era of global debt sustainability.” This report redefines how investors can assess sovereign debt risk in a rapidly evolving macroeconomic landscape.

As global debt levels reach historic highs, the team presents a bold, actionable framework for understanding not just how governments spend, save, and invest, but whether their holistic fiscal approach is sustainable. The analysis spans four major economies – the United States, Europe, Japan, and China – underscoring a critical inflection point in how economies manage debt, and how diverging approaches will have a material impact on asset allocation.

“Rising government debt has long been a specter over global capital markets, but we believe the time is now for investors to incorporate sovereign debt sustainability into asset allocation,” said Julia Hermann, CFA, Global Market Strategist at New York Life Investments. “The next decade in government spending is likely to look very different from the last, marking an inflection point in sovereign debt sustainability. We developed this report to move the conversation beyond near-term deficit questions and examine longer-held assumptions around global savings, investor behavior, and market consequences.”

Key highlights:

• A three-pillar framework for assessing sovereign debt sustainability: demand for debt, spending quality, and balanced use of the central bank backstop
• Four distinct sovereign debt management strategies most likely used by major economies moving forward, and long-term implications for asset allocation
• Insight into how diverging sovereign debt management paths may accelerate shifts in global capital flows, inflation regimes, and portfolio risk

“We’re entering an era where sovereign debt policy becomes increasingly influential in driving investment strategy,” said Hermann. “This research is designed to empower investment decision-makers with the tools to align portfolios with the new reality of sovereign debt management, globally.”

Developed by the Global Market Strategy team, this report is the latest installment in New York Life Investments’ Megatrends series, known for its deep macroeconomic research and forward-looking investment insight into the structural shifts shaping global capital markets.

For access to the full Megatrends report please see here.

About Global Market Strategy at New York Life Investments

Our team of market strategists connects macroeconomics to asset allocation. We provide actionable insight into market-driving events, structural themes, and portfolio construction to empower investment decision-making.

About New York Life Investments

With over $754 billion in assets under management as of March 31, 2025, New York Life Investments, a Pensions & Investments’ Top 30 Largest Money Manager*, is comprised of the affiliated global asset management businesses of its parent company, New York Life Insurance Company, and offers clients access to specialized, independent investment teams through its family of affiliated boutiques. New York Life Investments remains committed to clients through a combination of the diverse perspectives of its boutiques and a long-lasting focus on sustainable relationships.

*New York Life Investment Management ranked 26^th largest institutional investment manager in Pensions & Investments' Largest Money Managers 2024 published June 2024, based on worldwide institutional AUM as of 12/31/23. No direct or indirect compensation was paid for the creation and distribution of this ranking.

This material represents an assessment of the market environment as of a specific date and is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any investment product or any issuer or security in particular.

“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company.

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