DON’T look now, but after years of lingering on the brink of (or in) deflation, rich economies are heading in a different direction. Inflation is rising, and a handful of economy watchers are worrying that accelerating price increases could “rattle global markets”, as Mike Bird of the Wall Street Journal writes:
Rich-country government-bond prices tumbled Thursday, sending yields up on both sides of the Atlantic to levels not seen since the U.K.’s vote to exit from the European Union in June. In the U.S., the yield on the 10-year U.S. Treasury note surged as high as 1.847%, according to Tradeweb, its highest level in four months. Yields rise as bond prices fall. The German bund’s yield rose about 0.07 percentage point to 0.161% and the 10-year U.K. gilt yield was up about 0.10 percentage point to 1.259%, according to Tradeweb.
The rising yields are the latest sign that investors are bracing for what could be an epic shift across markets. In recent years, falling commodities, meager wage rises and insipid economic growth kept prices low and pushed investors into…Continue reading