US Bond Market Flouting Inflation Looks Increasingly Vulnerable
(Bloomberg) — There’s growing concern that the bond market has written down inflation risk too far.
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A sharp decline in yields over the past two months is mainly due to falling inflation expectations. That means that so-called real yields, which are protected from inflation, have declined less than their nominal counterparts. Their lagging performance reflects shrinking demand for protection against rising prices.
The broader bond market is also signaling that a…