Rising yields and rising correlation in major bond markets – end of cycle or correction?
- European bond yields have risen following the lead of US treasuries
- Yield curves are steepening despite minimal inflation
- A return to the natural rate of interest seems unlikely
- Over-indebtedness will stifle GDP growth and yields will fall
Since the beginning of 2015 the world’s largest bond markets have witnessed increasing yields. In the aftermath of the Great Financial Crisis many economies decoupled and their government bond markets followed suit. Now correlations are rising once more.