No brave new world for the bond market


Vaccine optimism: A health worker administering a Covid-19 vaccine at a mass vaccination site in Johannesburg, South Africa. The emergence of Covid-19 variants also means vaccine optimism was perhaps greater than markets first hoped. — Bloomberg

FAR from embracing for what some dub the “great reflation” or even the “new abnormal”, bond markets are starting to see a post-pandemic world much like the one before Covid-19 struck.

The past two months have seen a dramatic decline in US and global government bond yields – benchmark rates for most borrowing worldwide. That reversal snowballed this week as 10-year US Treasury yields fell to as low as 1.25% – almost half a percentage point below where they were in mid May.

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