Societe Generale's Rajappa: 'Concerned' about global debt, but too early to call a debt crisis

Summary

Subadra Rajappa discusses global debt concerns, stating it's too early to call a debt crisis but expects interest rates to remain high due to sticky inflation and fiscal issues. She sees rising stagflation risks and a disconnect between bond and equity markets, with the Fed least prepared to handle stagflation.

• Rajappa says it's too soon to call a debt crisis but is concerned about debt trajectory.
• She expects US interest rates to stay high or rangebound due to sticky inflation and fiscal inaction.
• Rajappa highlights stagflation risks rising, with oil prices heading higher.
• She notes a disconnect between bond market signals (inflation/debt concerns) and equity market valuations.
• The Fed is seen as least prepared to deal with stagflation from a policy perspective.
• No easy way to grow out of debt; tax increases and spending cuts are unlikely.