What on earth is going on in the bond markets? When America’s inflation hit 5 per cent last week, more than double the target rate and well above forecasts, bond yields defied convention and fell. I would have expected that yields would have risen more,” Larry Summers, the former US Treasury secretary and present prophet of inflation, said later. US ten-year government bond yields soared from 0.95 per cent at the start of the year to 1.75 per cent in March amid mounting fears of a price spiral. Markets reacted with what was effectively three rate rises, even though actual rates did not budge, quantitative easing remained unchanged and US inflation was 2.6 per cent.

Source: The Times June 14, 2021 16:02 UTC