Speaker · Updated
Thierry Wizman: latest market views
Macquarie Group
Summary
Thierry Wizman is Global FX and Rates Strategist at Macquarie Group, a former Bear Stearns emerging markets strategist and New York Fed economist who is frequently cited on Fed policy, Treasury yields and sovereign credit risk such as France's.
Chorus has 13 views from Thierry Wizman across 3 episodes on Bloomberg Surveillance and Prof G Markets since October 9, 2026.
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France's rising bond yields show markets doubt it can cut deficits; protests worsen the debt spiral.
Rising French bond yields signal that the market is less trusting of France's ability to rein in its deficits and make its debt sustainable. France's government spending relative to GDP is among the highest in the euro zone and the EU, so the market is effectively pushing for spending cuts or tax rises. The public knows about this pressure from politicians talking about spending cuts, and that is driving street protests that demand more spending. The protests hurt GDP: several French businesses expect revenue and sales losses this month, and lower GDP lowers tax revenue, which adds pressure on bonds. Wizman calls this a 'doom loop' between the bond market and the streets. It can only be resolved if the state takes a strong position, either by committing to austerity or by a political dissolution of France's ties to the EU and eurozone. Its debt is about 120% of GDP and deficits have run above 4% for years while growth stays low.
“And that makes a modicum of sense. If you think about it, the fact that bond yields have been rising is an indication that the market is less trustful of France's ability to rein in its deficits and get to a situation where their debt is sustainable.”at 41:11
Prof G Markets: Is Nvidia Selling More Chips Than Anyone Can Use? ·
US debt is more sustainable than France's because the US still grows; deficits stay near 6-6.5% of GDP.
US debt is about 100% of GDP, against roughly 120% for France, so France carries the larger debt load. The more important difference is growth. The US grows much faster than France, which has had low growth for a long time while running deficits above 4%. Rapid growth lets GDP outpace debt, which is the main way to shrink a debt-to-GDP ratio. Markets are comfortable with US debt: US credit default swap spreads have not widened, while French spreads have risen a lot. The US also issues debt in dollars, and the Federal Reserve can in principle support federal public finance, which France cannot do inside the euro. Wizman does not think the US is in worse shape than France, but he says the US is not free of risk. Visibility on US deficits coming down is low, so the deficit is likely to keep running at about 6% to 6.5% of GDP, which is larger than France's. Debt financing costs could eventually become a problem, though the market does not see one yet.
“The US has much faster growth than France. France has been in a state of low growth for quite a while at the same time that it has been running high deficits in excess of 4% for quite a few years. So The US is not France in that regard.”at 44:04
Prof G Markets: Is Nvidia Selling More Chips Than Anyone Can Use? ·
US yields are rising on heavy bond supply, including AI-buildout debt, and low domestic savings.
Wizman's view is that the main driver of high US yields is heavy bond issuance. The government is issuing bonds, and corporations are issuing large amounts of debt to finance the AI infrastructure buildout. Too many bonds are coming to market, especially high-grade long-term issues that compete with government debt. The US savings rate is also low because people prefer consumption to saving. That leaves little domestic capital to buy the bonds, so the US relies on foreign savings to finance both the deficit and the AI infrastructure projects.
“My view on what's driving high yields is that there's a lot of bond issuance. The government is issuing bonds. Corporations are issuing a lot of bonds because they have to finance the AI infrastructure build out.”at 44:57
Prof G Markets: Is Nvidia Selling More Chips Than Anyone Can Use? ·
The ECB's single rate suits strong eurozone members, hurting weak ones like France.
Countries in the euro zone differ, and some are weak and need lower rates while others are strong and need higher ones. The ECB is a single central bank that can set only one interest rate for the whole continent. When rates are too high, the weak countries bear the cost. France has had weak growth for a long time, so giving monetary policy to a federated central bank is, in Wizman's view, not working in France's interest these days.
“the European Central Bank is a one stop shop. It can only have one interest rate that prevails upon the whole continent to the detriment if it's too high of countries that are weak.”at 48:03
Prof G Markets: Is Nvidia Selling More Chips Than Anyone Can Use? ·
France may stage EU disassociation via referendums, most likely if the National Rally wins power.
Leaving the euro is not simple. There is no protocol for a country to exit a currency and revert to its old one, such as the French franc. Combining national currencies into one was much easier than undoing that. Even so, Wizman expects referendums in France that point toward a staged disassociation from Brussels and the EU, which he calls possible. That is much more likely if the National Rally wins the presidency and then a controlling share of the National Assembly.
“I do see referendums potentially coming in France that will point towards, let's call it a staged disassociation from the strictures of Brussels and the EU. ...it's gonna be much more likely if the national rally wins the presidency and then wins a controlling interest within the national assembly.”at 49:03
Prof G Markets: Is Nvidia Selling More Chips Than Anyone Can Use? ·
Fed likely skips an October hike but keeps a tightening bias, hiking at the December projections meeting.
He says some Fed officials have backed away from an October hike. The PCE price index has come in lower after revisions, and the job market is weaker, especially on wage growth. Officials now have reason to step back, watch the data, and hike only at meetings with a Summary of Economic Projections rather than at every meeting. December is the next such meeting, and the Fed is still inclined to hike, so its tightening bias remains, expressed by skipping meetings.
“They've seen the PCE price index after the revisions be lower. They've seen a job market that's a bit weaker... So they now have reason to maybe just take a step back and watch things evolve... The next one, of course, would be December. But still, the Fed is still inclined to be hiking.”at 19:17
Bloomberg Surveillance: Bloomberg Surveillance TV: October 9th, 2026 ·
ECB unlikely to use bond-buying backstops for France before its April election.
He says the ECB has stepped back from an October hike because of stress in France, and that pausing hikes is the first step. Reviving tools such as the SMP, PEPP or TPI is unlikely for now. French yields are not as high as those in Greece, Italy or Spain at the time of the earlier crisis. Recent programs also carry conditionality, which means fiscal austerity imposed from outside. That is hard to swallow before France's April election. France's deficit is near 5% of GDP against the 3% Maastricht limit. The ECB could act if things worsen before the vote, and the rules could be changed, but he doesn't see France at that stage.
“So we're we're really actually in limbo here. I don't think that the ECB will be invoking any of these programs, certainly not until things get things get worse. They could do it if things get worse before the election”at 22:10
Bloomberg Surveillance: Bloomberg Surveillance TV: October 9th, 2026 ·
Dollar strength rests on high oil and AI-driven US growth; it weakens if either fades.
He attributes the dollar's strength this year to two drivers. The first is high oil prices, which the US caused. The second is the surprise in US growth from the AI-driven infrastructure investment cycle. If both persist, the dollar stays robust. If the war ends early and oil falls, the dollar would weaken. If the AI investment cycle loses intensity, the dollar would also weaken again.
“...for two reasons... one, high oil prices, admittedly something that The US caused. And the other thing is the surprise we've seen in US growth this year because of the AI driven, infrastructure investment cycle.”at 23:47
Bloomberg Surveillance: Bloomberg Surveillance TV: October 9th, 2026 ·
AI infrastructure & data centers
Hyperscaler spending will continue; the bigger risk is state and local curbs on data centers.
He is not worried about returns on AI infrastructure projects. Hyperscalers are making money, which is why they are investing, and their projections suggest they will keep investing. His bigger concern is political. He is watching whether state and local legislation will curtail the buildout of data centers, which could interrupt the investment cycle that supports US growth and the dollar.
“I'm not concerned about things like internal rates of return for these projects. Right? The hyperscalers are making money. That's why they're investing... I'm much more concerned about the political cycles implications for AI at this point.”at 24:14
Bloomberg Surveillance: Bloomberg Surveillance TV: October 9th, 2026 ·
France faces a doom loop between rising sovereign spreads and protests; France could be 2027's Orange County.
Wizman sees the French protests and the rise in French sovereign spreads as linked, not independent. Higher spreads pressure the government to cut spending, but that pressure pushes people into the streets, who demand more spending. This creates a feedback loop between the bond market and social unrest. He compares it to the 2010s European doom loop between banks and sovereigns, and says the bond market and social protests now form a similar loop. He adds that highly leveraged sovereign-linked players could be the 'Orange County' blowup of 2027, not necessarily a corporation or bank.
“There's quite a lot of linkage, that's the protests in France and the rise in sovereign spreads in France. There's a bit of a doom loop happening in France here whereby as sovereign spreads rise, it puts a lot more pressure on the government to reduce spending, but at the same time that pressure gets the people out in the streets”at 1:58
Bloomberg Surveillance: Choppiness and Momentum Across Markets ·
Long-end yields will be capped by a financial stress event, not slowing growth, within months.
Wizman argues the recent rise in long-end US yields is happening because the economy is strong, not because it is slowing, so a slowdown is not what will cap yields. He is concerned that rapid yield moves have historically blown up leveraged players, citing Franklin National (1974), Continental Illinois (1984), Orange County (1994), LTCM (1998-99) and Silicon Valley Bank (2023). He expects a major financial stress event, maybe at a bank or a private credit company, in the next few weeks or months, and says that is what would put a top on yields.
“I'm concerned that we wake up in the next few weeks or months and we see a major financial stress situation, maybe at a bank, maybe at a private credit company, and that's what puts the top in the yield.”at 3:35
Bloomberg Surveillance: Choppiness and Momentum Across Markets ·
Latin America's shift to pro-US, market-oriented governments could make it a golden age.
Wizman says every recent Latin American election has moved right or center-right, and those governments (Argentina, Chile, Peru, Ecuador, Bolivia, Colombia, and likely Brazil after the runoff, with Venezuela and Mexico possibly aligned) now line up with the US geopolitically and strategically. For the first time nearly the whole hemisphere, except possibly Canada, is aligned. He expects trade, national security, border and immigration agreements to follow over the next few years. He cautions that the centrist, pro-reform governments must still perform and that the left-right swings must end.
“This has never happened, right? To have the whole hemisphere with the potential exception of Canada looking the same way, being aligned. I think this could be a golden age for Latin America.”at 4:35
Bloomberg Surveillance: Choppiness and Momentum Across Markets ·
AI infrastructure & data centers
Hyperscalers and data-center financiers are not at risk of financial stress; leverage risk sits elsewhere.
Wizman says AI-related leverage is real but immature, since these companies have not been levering up for five or ten years. Operating margins and profitability at the hyperscalers are huge, and they are well equitized with good access to both debt and equity markets. He does not expect a blowup at a hyperscaler or at a company financing data centers. He expects stress instead at firms outside the industry that are hurt by high yields and the rise in rates.
“Operating margins in those businesses are huge. Profitability is huge. These companies are well equitized... We're not gonna see a financial stress at a hyperscaler or someone who's been financing data centers, certainly not yet.”at 7:41
Bloomberg Surveillance: Choppiness and Momentum Across Markets ·
Shows
- Bloomberg Surveillance · 2 episodes
- Prof G Markets · 1 episode
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