Societe Generale's Rajappa: 'Concerned' about global debt, but too early to call a debt crisis

Societe Generale's Rajappa warns of a bond-equity disconnect: bonds price in stagflation (higher oil, sticky inflation, Fed on hold, limited fiscal room), while equities ignore it. She sees rates staying high, debt sustainability a concern by 2031, but too early for a crisis. Implies equities overvalued, NDX vulnerable, oil supported, dollar sideways.

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Societe Generale 8.0
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Subadra Rajappa 9.0

Societe Generale's Rajappa: 'Concerned' about global debt, but too early to call a debt crisis

wti

Stagflation risks are rising, especially in an environment where oil prices are heading higher, not lower.

3/27/2026 2:05:36 PM	short term sharp up	7 days later	+9.26%	+13.89%
12/12/2025 1:23:20 PM	medium term down	21 days later	+2.64%	-2.64%

yields

I think it's very hard to see a scenario where rates are going to go lower... I would expect interest rates to remain high, or at least in this kind of range for the foreseeable future.

3/12/2026 11:47:40 PM	short term up	5 days later	-0.61%	-0.61%
1/27/2026 7:14:21 PM	short term cautious down	5 days later	+0.56%	-0.28%
12/11/2025 1:18:26 AM	medium term down	21 days later	-0.17%	+0.17%
10/15/2025 12:41:41 AM	medium term cautious down	20 days later	+4.55%	-2.28%
9/17/2025 12:56:40 AM	short term cautious up	5 days later	+0.39%	+0.19%

Introduces Subadra Rajappa and asks if she agrees with Jamie Dimon's warning about a bond crisis ahead due to rising global debt, geopolitics, rising oil prices, and wider deficits.

Host (Vanessa)
Subadra Rajappa

It's too soon to call a debt crisis, but she is concerned about the trajectory for debt and deficits in the US and globally. The US benefits from reserve currency status, allowing higher debt levels than Japan or Europe.

She watches the debt situation very closely and notes the dynamics are different for the US due to reserve currency status.
Asks what would cause 'escape velocity' for bond market concerns to take over.

Host (Harry)
Subadra Rajappa

The US hasn't experienced that yet. The 2022 UK 'Liz Truss moment' is an example. The CBO points to 2031 when interest on debt exceeds growth rate—that's when debt sustainability becomes a concern, about 5 years away.

She references the UK 2022 bond crisis as a historical parallel and the CBO's 2031 projection as a key timeline.
References Jamie Dimon and Paul Tudor Jones' concern about US equity market cap to GDP being at historic levels, which could create a bond problem. Asks how rates can go lower despite what the administration wants.

Host (speaker4)
Subadra Rajappa

Very hard to see rates going lower. Expects much higher, stickier inflation for longer. No willingness to address debt, no tax hikes, no easy way to grow out of debt. Expects interest rates to remain high or in the current range for the foreseeable future.

She cites lack of political will to address fiscal issues and structural inflation as key reasons.
Asks about sovereign vs. credit markets, and private credit dynamics. Which would she rather not own?

Host (speaker6/speaker7)
Subadra Rajappa

Both are large markets; you have to pick credits and sovereigns carefully. Credit spreads (IG and high yield) are starting to show pressure. Private credit is hard to see as a systemic concern. Questions whether there are new risks we should be more aware of.

She notes Jamie Dimon pointed out it's been a while since a credit event, but wonders if new risks are emerging that markets aren't pricing.
Notes that last time Rajappa was on, she was sounding the alarm on stagflation, and her concern is even greater today. Asks how equity markets can be at record highs while stagflation is a true concern.

Host (Vanessa)
Subadra Rajappa

There is a clear disconnect between bond and equity markets. One of them is wrong. Equities look at valuations, bonds look at inflation, debt, dollar, and other risks. Stagflation risks are rising, especially with oil prices heading higher.

She is grappling with this disconnect herself and notes it's a fantastic question.
Asks if the implication is that equities are overvalued and not pricing in stagflation risk.

Host (Vanessa)
Subadra Rajappa

She is not an equity strategist, but there is a disconnect. Higher bond yields, sustained inflation, Fed on hold will impact growth. Stagflation is the scenario the Fed is least prepared for. The US government has limited fiscal capacity to stimulate in a downturn. Bond market is worried, stock market is not.

She emphasizes the confluence of factors: high yields, sticky inflation, Fed policy, limited fiscal room, all pointing to stagflation risk that equities are ignoring.

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