RUSSIAN Bonds Collapse

Summary

In this video, Joe explores the Russian economy's challenges, focusing on the difficulty Russia faces in selling bonds to fund its expenditures amidst sanctions and inflation. Despite the Russian Central Bank raising interest rates to 19% to combat inflation, the bond market is not responding positively. The video delves into the historical bond yields, the decline in overseas investment in Russian bonds, and the implications of these trends for Russia's financial future. Joe highlights that while GDP figures might suggest strength, the underlying economic indicators, such as high inflation and the struggle to sell bonds, paint a more concerning picture of Russia's economic health.

Takeaways

• 💼 Bonds are a primary method for governments to fund themselves, acting as a loan with a promise to pay back with interest over a set period.
• 📈 Russia has been increasing interest rates to combat high inflation, which is a common economic strategy.
• 📉 Despite high interest rates, Russia is struggling to sell bonds, indicating a lack of confidence from investors.
• 🚀 The Russian Central Bank has raised interest rates seven times in the past 14 months, reaching a high of 19%.
• 💸 The high yield on Russian bonds, which is near historical peaks, is not attracting investors due to concerns about the economy.
• 📊 Russian bond issuance has seen a significant shortfall compared to targets, especially in the first half of 2024.
• 🌐 Overseas investment in Russian bonds has dropped significantly since the invasion of Ukraine, reducing from 3.4 trillion to 1.4 trillion rubles.
• 📉 The percentage of Russian bonds held by overseas investors has fallen from 28% to 7.2% since the invasion of Ukraine.
• 💹 The Russian economy's fundamentals, such as inflation and interest rates, are more indicative of its health than GDP figures.
• 🏦 Russia's ability to finance its expenditure through bond sales is diminishing, which could lead to a quicker depletion of its reserves.

Q & A

What is the primary method governments use to fund themselves?

Governments primarily fund themselves by issuing bonds, which are essentially loans.

How do bonds relate to a country's debt?

When countries are in debt, it generally means they are issuing bonds to raise funds.

What is the role of interest rates in the bond market?

Interest rates are crucial in the bond market as they determine the prevailing rate of interest a country offers on its bonds, affecting their attractiveness to investors.

How has Russia been using bonds to fund its expenditure?

Russia has been using bonds to fund its expenditure, especially with its income being limited due to sanctions.

What is the current challenge Russia is facing with bond sales?

Russia is struggling to raise enough funds through bond sales despite offering high interest rates.

Why has Russia increased its interest rates over the past 14 months?

Russia has increased its interest rates to tackle high inflation, which is a common strategy used by countries to curb inflation by making borrowing more expensive.

What is the current interest rate set by the Russian Central Bank?

The Russian Central Bank has set the interest rate at 19%, which is a high yield compared to global standards.

Why might high bond yields not equate to high demand in Russia's case?

High bond yields might not equate to high demand because investors are concerned about the Russian economy's stability and ability to repay the debt in the future.

What has been the trend of overseas investment in Russian bonds over the past 20 years?

There has been a general increase in demand from overseas investors over the past 20 years, but this trend has reversed since Russia's invasion of Ukraine.

How has the invasion of Ukraine impacted Russia's ability to issue bonds?

The invasion of Ukraine has led to a significant reduction in the value of Russian bonds held by overseas investors and a decrease in their percentage share of total bonds.

What are the implications of Russia's struggle to raise funds through bonds?

If Russia cannot raise enough funds through bonds, it may have to rely more heavily on its reserves, which could accelerate the depletion of its cash reserves and lead to economic instability.

Outlines

00:00

📈 Economic Struggles: Russian Bonds and Interest Rates

The paragraph discusses the current state of the Russian economy, focusing on the challenges Russia faces in selling bonds to fund its expenditures. Despite high interest rates, Russia is struggling to issue enough bonds to meet its financial needs. The video will explore the reasons behind this struggle, including the impact of sanctions, inflation, and the country's response to these economic pressures.

05:00

📊 Bond Issuance and Investor Demand

This section of the script analyzes the bond issuance by the Russian government and the actual amount raised compared to the proposed levels. It highlights a significant shortfall in bond sales, especially after the invasion of Ukraine. The data shows a decline in both the amount and the percentage of bonds held by overseas investors, indicating a loss of confidence in the Russian market.

10:02

📉 Yield Trends and Investor Concerns

The paragraph examines the historical yield on Russian bonds, showing that despite high yields, there has been a decrease in demand. It discusses how geopolitical events, such as the annexation of Crimea and the invasion of Ukraine, have influenced bond yields and investor behavior. The current high yield is juxtaposed with the falling demand, reflecting investor concerns about the Russian economy's stability.

15:03

🌐 Impact of Sanctions and War on the Russian Economy

This part of the script delves into the effects of international sanctions and the war in Ukraine on the Russian economy. It discusses how these factors have led to a decrease in foreign investment and a reliance on domestic capital. The paragraph also touches on the potential long-term implications of these economic trends for Russia.

20:04

🚨 Alarming Economic Indicators and Future Outlook

The final paragraph summarizes the key economic indicators that signal a crisis in the Russian economy. It points out the rapid rise in inflation, the Central Bank's response with high interest rates, and the lack of investor confidence in Russian bonds. The video concludes with a warning about the potential for Russia to run out of money if it cannot secure more debt financing.

Keywords

💡Bonds

Bonds are a form of debt securities, essentially loans that governments or corporations issue to raise funds. In the video, it is discussed that Russia has been using bonds to fund its expenditures, particularly in the face of limited income due to sanctions. Bonds are a critical instrument in public finance, allowing governments to borrow money by promising to pay back the principal along with interest over a set period.

💡Coupon

A coupon in the context of bonds refers to the periodic interest payment that the bond issuer promises to pay to the bondholder. The video explains that the coupon rate is set according to the prevailing interest rate in the country at the time of issuance. It's a key component of bond investment, as it represents the income that investors receive from holding bonds.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how Russia has seen a rapid increase in inflation, which is a significant economic issue that can erode the value of money and savings. High inflation is a driving factor behind Russia's high interest rates and bond yields.

💡Interest Rates

Interest rates are the cost an borrower pays to a lender, or the amount a lender receives for extending a loan. The video explains that Russia has been increasing its interest rates in response to high inflation. Interest rates are a key monetary policy tool used by central banks to control inflation and stabilize economies.

💡Sanctions

Sanctions refer to penalties imposed on individuals, entities, or countries for perceived wrongdoing. In the video, it is mentioned that Russia's income is being limited due to sanctions, which have impacted its ability to raise funds through bond sales. Sanctions can significantly affect a country's economy by restricting trade, investment, and financial transactions.

💡Yield

Yield in the context of bonds refers to the return an investor realizes on a bond, which includes both the interest income and any capital gains. The video highlights that despite high yields on Russian bonds, investor demand has been falling, which is a concern for Russia as it seeks to fund its expenditures.

💡Overseas Investors

Overseas investors are investors from outside the country issuing the bonds. The video discusses how there has been a decrease in demand from overseas investors for Russian bonds following the invasion of Ukraine. These investors play a crucial role in a country's ability to raise funds on the international market.

💡Russian Central Bank

The Russian Central Bank, also known as the Bank of Russia, is the country's central bank and is responsible for monetary policy. The video mentions how the Central Bank has increased interest rates multiple times to combat inflation. Central banks play a pivotal role in managing a nation's money supply and interest rates.

💡Budget Deficit

A budget deficit occurs when a government's expenditures exceed its revenues. The video implies that Russia is trying to fund a budget deficit through bond sales. Budget deficits are often financed by issuing debt, which can lead to an increase in a country's national debt.

💡Wartime Economy

A wartime economy refers to the economic conditions and policies that are adopted during a period of war or conflict. The video discusses how Russia's move to a wartime economy has contributed to inflation and wage increases. A wartime economy often involves significant government spending on military and defense, which can strain the economy.

💡GDP

Gross Domestic Product (GDP) is the total value of goods and services produced in a country during a specific period. The video suggests that while Russia's GDP may appear strong, this might not reflect the true state of the economy due to factors like wartime spending. GDP is often used as a measure of a country's economic performance.

Highlights

Bonds are a primary method for governments to fund themselves, similar to issuing loans.

Russia has been increasing interest rates to combat inflation, reaching a high of 19%.

Despite high interest rates, Russia struggles to sell bonds to fund its expenditures.

The Russian Central Bank has increased interest rates seven times in 14 months.

A 19% interest rate is unusually high, indicating a significant return for investors.

The demand for Russian bonds is falling despite high yields.

Over the last 20 years, there has been a general increase in demand from overseas investors for Russian bonds.

Since the invasion of Ukraine, the demand from overseas investors has significantly decreased.

In 2023, Russia aimed to raise 3.15 trillion rubles but only managed to raise 2.65 trillion rubles through bonds.

In the first half of 2024, Russia faced a shortfall of 700 billion rubles against an ask of 1.8 trillion rubles in bond sales.

Historically, Russian bonds have had high yields, averaging more than 5% over the past 22 years.

The current yield on Russian bonds is close to the highest in the last 22 years.

Overseas investors held a significant portion of Russian bonds, but this has dropped since the invasion of Ukraine.

The value of Russian bonds held by overseas investors has decreased by 60% in two years.

Russia is now largely dependent on raising capital from the Russian market alone.

Russia's economy shows serious problems through rising inflation and high interest rates.

Investors are concerned about the Russian economy's ability to repay debt, leading to low bond sales.

If Russia cannot raise more debt, it may have to dip further into its reserves, accelerating the cash rundown.

Transcripts

hi welcome back to Joe blogs in today's

episode I want to talk to you about

what's happening in the Russian economy

and specifically to talk about Bond

sales now bonds are basically loans and

this is the main way that governments

fund themselves when we talk about

countries being in debt it's generally

bonds that they're issuing so they issue

a note which says I will pay back the

bearer of this Bond $100 or 100 rubles

or whatever the currency is in a set

period of time so it might be in 10

years time 15 20 25 30 years time and

during that period the holder will be

paid interest in the form of a coupon

and the coupon basically is set at

whatever the prevailing rate of interest

is in that country at that time and

Russia has been using bonds recently to

try to fund all of its expenditure

because obviously its income is now

being limited as a result of the

sanctions and in today's video I want to

talk about the fact that Russia is now

struggling to be able to raise bonds and

that's surprising because over the

course of the last 14 months Russia has

been increasing its interest rates as a

result of increasing inflation we've

talked about this many times before on

the channel but most countries use

interest rates as a way of tackling High

inflation so when inflation Rises

generally speaking you'll increase your

interest rate that basically makes

borrowing more expensive so individuals

and companies will generally reduce the

amount that they're borrowing therefore

there's less cash available so they'll

spend less and that means that demand

Falls and therefore prices should go

back down that's the general logic but

in Russia over the past 12 months we've

seen a rapid increase in inflation and

in response to that the Russian Central

Bank has increased interest rates on

seven separate occasions over the past

14 months with the most recent being an

increase of 100 basis points to 19% and

19% is a really high yield if you think

about this in your own context if you

were being paid 19% for money that you

were putting into the bank that would be

a fantastic return people would be

delighted with a yield of 19% but

unfortunately from Russia's point of

view that isn't the case in the market

right now and Russia is struggling to be

able to issue enough bonds to keep

funding all of its expenditure so in

today's video I'll have a look at what's

been happening with Russian Bond

issuance over the course of the last 20

years but specifically we'll be looking

at what's been happening since Russia

invaded Ukraine we'll have a look at

what's going on with bond yields because

yield is really what people invest into

bonds for they want to make a return and

you would think that a high yield would

equate to high demand but that's not

happening in Russia right now we'll have

a look at what's been happening with

with overseas investors because that's

one of the critical things from Russia's

point of view over the course of the

last 20 years or so there has been a

general increase in demand from overseas

investors however since the invasion of

Ukraine that situation has turned around

and then finally today I'll wrap up with

my summary to what I think is happening

with Russia right now with regards to

its interest rates inflation and bond

appetite and what the implications of

struggling to be able to raise enough

money through bonds will be for Russia

going forward but before we get into all

of that I'd like to say once again thank

you so much to everyone that's

supporting the channel really really

mean this if you're a long-term

supporter either through patreon where

you can get early access to my videos

and watch them advert free or YouTube

membership where you'll also get Early

Access or buy me a coffee membership

thank you for that long-term support

really does help to keep me going and if

you've bought me a coffee or sent me a

YouTube super thanks recently thank you

so much for the time and the effort and

the generosity involved in that really

do mean

it now just before we go on any further

today I want to talk to you about

today's sponsor nordvpn who I use on a

daily basis and who are offering Joe

blogs viewers an exclusive deal

unfortunately cyber crime is becoming a

daily occurrence we're hearing about it

more and more and in fact if you follow

the channel you'll know that this

channel itself was hacked by cyber

criminals and if you want to avoid the

same thing happening to you and your

finances you need to start using nordvpn

by using nordvpn every time you log on

you'll be protected from all sorts of

criminal activity and don't override it

like I did and expose yourself to a

hacking incident I spend a lot of my

time researching articles to put

together my videos and unfortunately I

find that sometimes I'm Geo blocked from

those articles I'm not in the right

country however when using nordvpn

you'll be able to access information

data news articles TV shows movies and

sports matches that are not available in

your region and the great news is that

Joe blogs viewers are being offered an

exclusive deal which you can access by

clicking in the link below and the great

news is that it offers a 30-day money

back guarantee so if you're not happy

you can get your money back within the

first 30 days as I mentioned at the

start of today's video the way that most

governments around the world are funding

themselves is through the issuance of

bonds if you need to raise money to pay

for all of your budget you raise money

from investors you issue bonds promising

to pay those investors back in five or

10 or 15 or 20 or 30 years time and

those bonds will have a fixed coupon

attached to them and you would think the

fact that interest rates are currently

running at 19% would make Russian bonds

highly attractive in the market because

you can earn a coupon of

19% however unfortunately for the

Russian authorities that isn't proving

to be the case this chart which has been

put together using data from the Russian

Ministry of Finance shows the proposed

level of bond raising by the Russian

government and the actual amount raised

per quarter dating back to the first

quarter of

2022 the blue bars on this chart show

the proposal by the Russian Ministry of

Finance basically how much they were

looking to raise each quarter and the

green bars show the actual amount that

they've raised in terms of issuing those

bonds so we start off by looking at what

happened in the first quarter of 2022

which includes the period when Russia

invaded Ukraine which started on the

24th of February 2022 you can see that

in that first quarter Russia was looking

to raise 700 billion rubles in bonds

however because of the impact of the war

the actual amount it raised was less

than 100 billion now the second quarter

of 2022 is the First full quarter of the

war and at that time commodity prices

were all over the place and nobody

really knew what was going to happen and

you can see that the Russian authorities

didn't look to raise any bonds and

didn't raise any money now in the third

quarter the Russian authorities tested

the market to see if there was any

appetite and there wasn't and in the

fourth quarter you can see that once

again they tested the market and

interestingly there was a lot of

appetite from investors at that time and

they raised 1.2 trillion rubles in that

quarter now unfortunately no details

have been provided as to who the

investors are but it's likely that that

came from pent up demand within Russia

now interestingly in the first quarter

of 2023 the Russian authorities

increased the ask to 800 billion rubles

but unfortunately investor demand was

down and they only managed to raise

650 billion in the second quarter of

2023 the authorities increased their ask

to 850 billion rubles but only managed

to raise 800 and in the third quarter

Russia ambitiously was to raise 1

trillion rubles but only managed to

raise 650 billion in the fourth quarter

of 2023 the as reduced to 500 billion

rubles and the Russian authorities

managed to raise 550 so in total during

2023 Russia was looking to raise

3.15 trillion rubles but only managed to

place bonds to the value of 2.65 billion

which represents a shortfall of 500

billion rubles or around 16% in the

first quarter of 2024 Russia was looking

to raise 800 billion rubles but only

managed to secure orders for

750 however in the second quarter of

2024 which is the most recent statistics

that we have Russia was looking to raise

1 trillion rubles but only managed to

secure orders for

350 billion which represents a short

fall of around

65% and this is despite the fact that

Russia has increased its interest rates

significantly over the course of the

last 14 months from around

7.5% to the current level of

19% and when you look at the performance

over the past six quarters the Russian

authorities have looked to raise 5

trillion rubles however they have only

managed to secure orders for 3.75

billion rubles which represents a

shortfall of

25% however if you look at the

performance in the first half of 2024

the first and second quarters the

combined shortfall of 700 billion rubles

against the ask of 1.8 trillion

represents a shortfall closer to 40%

which is obviously highly concerning

from Russia's point of view particularly

when you take into account that the

yields being offered in 2024 are

significantly higher than they were in

2023 as a result of the fact that Russia

has been rapidly increasing its interest

rates this chart shows the historic

yield on Russian bonds dating back to

2002 and the scale on both sides of this

chart goes from 0% at the bottom to 25%

yield at the top and what this chart

shows is that historically the yield on

Russian bonds has been high averaging

more than 5% over the course of the past

22 years and at certain times the yield

has been extremely high back in 2002

which was a period when the Russian

economy was struggling the yield on

Russian bonds was above 15% and actually

Rose to a high of just under 20% before

coming back down to less than 5% by 2004

now between 2004 and 2008 the bond yield

stabilized at around 6% however

following the global financial crisis

which hit the world in 2008 bond yields

to around 15% and then normalized back

down to around 6 or 7% between 2010 and

2014 now 2014 was the year when Russia

annexed the Crimea area previously of

Ukraine and as a direct result of that

and the sanctions that were applied

against Russia at that time the Russian

economy started to decline and the yield

on Russian bonds increased from around

6% to closer to 20% now as the Russian

economy recovered and got back to normal

Bond gals came back down and by 2021

they were actually down to less than 5%

which is one of the lowest levels that

we can see on this chart however

following the invasion of Ukraine in

2022 bond yields in Russia spiked again

as a result of the fact that there was

concern from investors as to what was

going to happen in Russia and so they

were looking for bigger yields in order

to take that risk and bond yield Rose

above 15% now during 2023 the yield on

Russian bonds actually fell below 10% as

a result of the fact that the Russian

Central Bank significantly reduced the

official rate of interest from the

emergency rate of 20% that was

introduced immediately following the

invasion of Ukraine down to a level of

7.5% however as you can see over the

course of the past 12 months as the

central bank has increased interest

rates in order to try to offset what was

happening with inflation the yield on

Russian bonds has increased to the

current level of around 18 or 19% and

when you take a step back and look at

where these bonds sit in the last 22

years the current yield is close to the

highest that Russian bonds have paid

however despite that demand for Russian

bonds at the moment is falling and

that's as a result of what else is going

on in the Russian economy and concern

from investors both in Russia and

overseas as to what's going to happen

over the course of the next 6 to 12 to

18 months

this chart shows the percentage share of

Russian bonds being held by overseas

investors between February 2012 and

February 2024 which is the latest data

that we have available the blue section

of this chart shows the value of those

overseas Bond Holdings and is measured

against the scale on the left hand side

which is shown in trillions of rubbles

and the red line chart shows the

percentage of bonds held and is measured

against the scale on the right hand side

which goes from 0% at the bottom to 40%

at the top so if we start off by looking

at the total value of the bonds which is

shown by the blue section of the chart

back in February 2022 the value of bonds

held by overseas investors was very

small less than 100 billion rubles

however as you can see over the course

of the following 10 years there was a

significant increase in the value of

bonds being purchased by overseas

investors as Russia became more

attractive to the international markets

more International companies moved to

Russia established businesses and so the

Russian economy became integrated into

the global economy and by the end of

October 2021 the total amount of Russian

Bonds in overseas investors hands was

3.4 trillion rubles which represents an

increase of 34 times over that 10-year

period however as you can see following

Russia's invasion of Ukraine which

commenced in February 2022 there's been

a significant reduction in the value of

Russian bonds being held by overseas

investors and as out February 2024 the

total value was down to 1.4 trillion

rubles which represents a reduction of 2

trillion rubles or around 60% in a

2-year period if we now have a look at

the red line that shows the percentage

of Russian bonds being purchased by

overseas investors back in February 2012

the percentage was sitting at around 4%

which means that at that that time 96%

of all of the Russian Bonds were being

purchased by Russians in the 12 months

between February 2012 and 2013 there was

a significant increase in the percentage

of Russian bonds being purchased and by

February 2012 it was up to

28% now following Russia's invasion of

Crimea and subsequent annexation there

was actually a reduction in demand and

by February 2015 the amount of Russian

bonds being purchased overseas had

fallen to 18% over the following 2 years

the interest in Russian bonds increased

for overseas investors and by February

2018 the percentage being purchased was

up to 32% as a result of the slowdown in

the global economy in 2018 and

particularly in the Russian economy the

appetite for Russian bonds fell and by

October 2018 the percentage being

purchased by overseas investors was down

to 24% however that appetite soon

returned and by February 2020 35% of all

Russian bonds were being bought by

overseas investors however as you can

see over the course of the past 4 years

the amount of Russian bonds being

purchased overseas has fallen

significantly and by February 2024 it

was down to

7.2% and if the current Trend continues

it's likely that the amount of overseas

purchases will be reduced to virtually

zero and that means that Russia is now

fully dependent on raising all of its

capital from the Russian Market

so what's the summary and conclusion

today well I wanted to post this video

because I think what's happening with

regards to interest rates and inflation

and bond sales are really important in

telling us the real story as to what's

going on with the Russian economy right

now if you just look at the press and

look at GDP figures you'd think that

Russia is doing fantastically well and

of course I'm hit with thousands of

comments like that every single week

people telling me that Russia is

actually the strongest economy in the

world and I'm talking a lot of rubbish

but actually you need to look at the

fundamentals because GDP is something

that is relatively easy to inflate

particularly if you do what Russia is

doing right now and start sponsoring all

of the companies within Russia paying

them directly from the central bank to

produce lots of things for Ukraine that

is bound to drive up the profitability

of those businesses and will increase

your GDP however those sales are not

genuine sales Russia isn't selling

things to the rest of the world it's

basically paying itself using its

reserves and if it continues to do that

it will run out of cash at some point in

the future because there's no external

money going into to that whole process

so looking at the fundamental factors on

the economy what's happening with

inflation and interest rates really

gives us a much better read as to how

healthy things are in Russia right now

and what we've seen is that contrary to

the the rest of the world inflation has

risen rapidly over the past 12 months

and is now sitting at more than double

the target rate of 4% and that Target

rate of 4% is actually double the target

rate for most other economies in the

world most developed economies have a

Target rate of 2% so 4% is already more

than you'd expect but the fact that

inflation is actually sitting at 9%

tells us that there are some serious

problems and that inflation is being

driven by a number of factors firstly

the move to the wartime economy has

fueled it because those companies that

are being paid by the Kremlin have been

recruiting heavily they've been trying

to get in as many people as possible to

keep producing as much as possible to

get paid all of that exceptional profit

they're offering higher wages to attract

in those people those people who are

leaving their jobs are then leaving

vacancies behind and those companies are

having to compete in this new market so

they're having to offer higher wages and

as well so if you're an employee in

Russia right now it's a great time

because there's lots of money available

you're being paid lots of salary so all

of the people in Russia have got lots of

free income so they're spending they're

going out and spending in the stores

that's driving up inflation so partly

this inflation is being driven by the

move to the wartime economy but it's

also being driven up by what's happening

with Imports because the sanctions that

have been applied against Russia has

restricted the availability of certain

Goods because companies won't sell to

Russia simple economics tell us that

when there's a restriction in the supply

and demand remains High then prices will

rise and that's what's happening in

Russia right now now in order to try to

counter that high level of inflation the

Russian Central Bank has been increasing

interest rates and it's increased them

on seven separate occasions in the past

14 months from

7.5% to the current level of 19% and

that 19% is really quite interesting

because it's only 1% below what Russia

regarded as an emergency rate back in

February 2022 so Russia is telling us

that its interest rates are now back to

emergency levels that tells us that

there's an emergency going on in the

economy right now and that Russia needs

to solve it so anybody that thinks that

the Russian economy is doing really well

just needs to look at what's happening

with interest rates and the fact that

the Russian Central Bank is still

concerned about what's happening and

when you look at what's going on with

producer prices they're continuing to

rise at more than double digits so

therefore it's likely that inflation

will continue Rising so all of this is

seriously bad news but the biggest issue

I think coming out of today's video is

that Russia is now struggling to be able

to place its bonds because the way that

it's financing a lot of its expenditure

is by issuing bonds basically debt IT

issues a promisory note saying to people

we will pay you back at some point in

the future give us your money now we'll

spend it on whatever we like the war in

Ukraine predominantly and at some point

we'll pay you back now investors would

look at the yield normally and say 19%

wow this is fantastic we will take as

many of those bonds as you can issue

however with any form of lending you

always have to look at the risks and

investors are looking at Russia right

now and saying okay the yield is 19% why

is it 19% is there something happening

and when you look at what's going on in

the economy it tells you that there are

alarm bells ringing there are concerns

about what's happening right now and

whether or not Russia will be able to

pay that debt back in the future because

there's no point taking a bond if you're

not going to be repaying there you'd

rather go for a lower yield and know

that you're going to get your Capital

back and that's what's happening with

investors right now overseas investors

have pulled back from Russia and

investors within Russia clearly are

cooling their demand for these type of

bonds so we saw from the data that

Russia only managed to raise around

oneir of the total of 1 trillion rubles

that they were looking to raise in the

second quarter of 2024 and it'll be

really interesting to see what happens

with the data when it comes out for the

third quarter because if Russia has had

its supply of bonds cut off if it can't

raise any more debt then it's going to

have to dip into those reserves that

it's got already even further and that

will accelerate the rundown of that cash

and could lead to Russia running out of

money so the overall summary of today's

video is that Russia has once again

increased interest rates the reason that

they're increasing interest rates is

because there are serious problems in

the economy right now which is showing

up through Rising inflation if Russia

doesn't sort this out we could get to a

point where inflation rises even further

interest rates go up even further

unfortunately from Russia's point of

view despite the fact that they're

increasing the yield on their bonds

nobody wants to buy the bonds right now

because investors are concerned about

what's happening and all of this is

seriously bad news for the Russian

economy so hopefully you've enjoyed

today's video you found it useful

informative and thought-provoking if

you've liked what I've said then please

give me a thumbs up thank you for

watching this video all the way through

to the end and here's something to put a

smile on your face