Source One International” believes that market misgivings about sovereign debt issuance are there for good reason.

“Source One International” strategists say that the current, widely held concerns about the levels of debt being accumulated by several developed nations are entirely justified and that investors should take contrarian commentary suggesting there are few signs of a bubble in the bond markets with the proverbial pinch of salt.

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Yields on sovereign debt issued by the US and UK have begun to increase now that both countries’ central banks have ended their quantitative easing programs.

Analysts at “Source One International” believe that the point is fast approaching where the yields being demanded by investors to lend money to these countries will force them to restart the programs and print more money to buy their own debt.

The analysts suggested that default was unlikely in the UK and the US because both countries could print their own money but the specter of inflation would seriously damage their value.

On Greece, the “Source One International” analysts said there was considerably less room for maneuver since they cannot print their own currency so default was a more plausible outcome.

Britain and the US are borrowing money in order to pay for the stimulus packages and public spending programs launched to help drag their economies out of recession but, as the “Source One International” analysts believe, the cost of borrowing for both nations may soon be prohibitive.

by Dennis Paulson

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