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Illustration: Aïda Amer/Axios

The world's debt is rising to unprecedented levels. While politicians and the general public have seemingly lost interest, capital markets are beginning to show signs of strain, financial experts say.

Driving the news: Global debt surged by $7.5 trillion in the first half of the year, hitting a new record of more than $250 trillion, according to data released Thursday from the Institute of International Finance.

  • The world's debt has now risen to 320% of what it produces, the highest level recorded — and IIF economists say they see "no sign of a slowdown."
  • They expect the global debt load to exceed $255 trillion by the end of the year.
  • The U.S. budget deficit rose 34% in October from a year earlier, and the U.S. and China are leading the debt binge with more than 60% of the world's total, IIF notes.

What's happening: It’s all starting to add up, experts say.

  • U.S. government debt auctions this year have been strained.
  • The systemically important repo market that banks use for cash buckled in September, necessitating hundreds of billions of dollars of cash infusions from the Fed.
  • The government is exploring reintroducing 50- and 100-year bonds to alleviate stress in the debt markets.

Threat level: While these are hardly mainstream economic indicators, the recent troubles in U.S. capital markets "may be an early warning of a digestion problem," Catherine L. Mann, global chief economist at Citi, said during last month's National Association for Business Economics meeting.

The big picture: "This is the longest expansion in history, but it is also the weakest and part of that is the extremely high debt," Liz Ann Sonders, chief investment strategist at Charles Schwab, tells Axios.

  • "The effect may be a subtle crisis over time, like we have seen with just a depressing pressure on growth," she adds.

Be smart: Even Fed chair Jerome Powell, who has been consistently upbeat and focused almost exclusively on the strengths of the U.S. economy, was dour in his assessment of current U.S. debt levels.

  • “The federal budget is on an unsustainable path, with high and rising debt,” Powell told the Joint Economic Committee Wednesday. “Over time, this outlook could restrain fiscal policymakers’ willingness or ability to support economic activity during a downturn.”
  • “I remain concerned that high and rising federal debt can, in the longer term, restrain private investment and, thereby, reduce productivity and overall economic growth.”

Go deeper:

Go deeper

Updated 2 hours ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

4 hours ago - Health

CDC director says COVID-19 messaging should have been clearer

Rochelle Walensky. Photo: Stefani Reynolds-Pool/Getty Images

Rochelle Walensky, director of the Centers for Disease Control and Prevention, said in an interview with the Wall Street Journal that the messaging around the COVID-19 pandemic and changing guidance should have been clearer.

State of play: Walensky is being coached by media experts and is planning to have more press briefings by herself in order to ensure that CDC is seen as an independent, scientific entity, rather than as a political one, the Journal reports.

4 hours ago - World

UAE asks U.S. to reinstate Houthi terrorist designation after attack

Secretary of State Tony Blinken (left) listens to United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan during a joint news conference at the State Department iin October. Photo: Andrew Harnik/Pool/AFP via Getty Images

Emirati Foreign Minister Abdullah Bin Zayed asked Secretary of State Tony Blinken in a phone call Monday to re-designate the Houthi rebels in Yemen as a terrorist organization, a senior Emirati official told Axios.

Why it matters: Less than a month after he assumed office, President Biden rolled back the Trump administration’s decision to make the designation. He said it hampered humanitarian assistance to the Yemeni people. Since then, the Houthis have escalated their attacks against Saudi Arabia and other countries in the region — including an attack Monday in Abu Dhabi.