In our latest Global Outlook, we revisit the bond market, look at the aftermath of Xi's visit to Washington, consider the implications of the war in Ethiopia's Tigray region, and what the US deal on Greenland could mean for Australia's Antarctic holdings.
Yields increasing on the US bond markets increases cost of their borrowing which makes it hard to spend as much as they want on their military and other discretionary spending. As has been seen many times, the bond markets have the power to make leaders hesitate and, in some cases, to end their careers. Following Xi Jinping's visit to Washington it seems that there was a lot of pomp and pagentry for no significant outcomes aside from further delaying decisions.
The Horn of Africa is once again in the news as a civil war within Ethiopia's Tigray province which is introducing problems on the Western side of the Red Sea. Further compounding the issue is their need to route shipping via Djbouti as the formation of Eritrea removed Ethiopia's access to the ocean. Ethiopia also claims Egypt and Sudan are funding the rebels along with Eritrea. It gets even more complicated when you consider that all of the main forces in the Middle East, including Saudi Arabia, UAE, Israel and more have stakes in this region along with many other countries. This is a very complicated situation that's only getting worse.
Finally, we look at the USA's recent agreement with Greenland that doesn't get them anything more than they already had aside from a veto of other foreign powers building in Greenland, which Denmark had been blocking anyhow. This approach by the USA to block foreign powers from building there has implications for Antarctica where China is building yet another research base. It is not inconceivable that the USA could pressure Australia to remove China's bases, some of which are on areas of Antarctica claimed by Australia.
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