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Debt in smaller emerging market countries, which are now providing the majority of the world's growth, rose to a record high of $69 trillion in the first quarter, IIF reported.

Why it matters: EM debt has been growing at a breakneck pace so far this year, as global investors search for yield with developed market interest rates at or near all-time lows.

  • The lower rates in the U.S., Europe and Japan are pushing increasing demand for higher-yielding EM bonds, with yields on the U.S. benchmark 10-year Treasury note at the lowest since 2016, and many European and Japanese government bonds holding negative yields.
  • Increasingly countries with little to no track record and shaky fundamentals have been able to issue larger bond issues for extremely low rates.

What to watch: Net borrowing in so-called frontier markets — countries too small or underdeveloped to be labeled emerging, such as Zambia, Bangladesh and Tunisia — reached over $250 billion in 2018, bringing the total stock of FM debt to more than $3.2 trillion, according to IIF data. That was equal to 117% of frontier countries' GDP.

The big picture: This could become a problem for both the investors buying the bonds and the countries issuing them. The IMF and IIF both highlighted growing concerns about debt sustainability earlier this year, prompting calls for policy remedies including more transparency in lending to vulnerable countries.

Go deeper: The global debt binge begins anew

Go deeper

10 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

Scoop: Biden weighs retired General Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star General Lloyd Austin as his nominee for defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.

Updated 12 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: WHO: AstraZeneca vaccine must be evaluated on "more than a press release."
  2. Politics: Supreme Court backs religious groups on New York COVID restrictions.
  3. World: Thailand, Philippines sign deal with AstraZeneca for vaccine.
  4. Economy: Safety nets to disappear in December Black Friday shopping across the U.S., in photosAmazon hires 1,400 workers a day throughout pandemic.
  5. Education: National standardized tests delayed until 2022.