As was noted in the previous post (link here), IMF is quite rightly concerned with the extent of the global financial bubbles that have emerged in the wake of the years-long QE waves.
This chart shows the extent of over-valuation in sovereign debt markets:
But the following charts show the potential impact of partial unwinding of the bubbles. First up: bonds:
Per IMF: “The scenario generates moderate to large output losses worldwide” as chart below shows changes in the output in 2017 under stress scenario compared to benign scenario:
And here’s what happens to projected Government debt by 2018: