Reading between the lines

How do we view the recent rise in government bond yields? At the time of writing, government bonds have attracted some support as investors look to park funds in safety. However, in recent weeks, benchmark yields, on both sides of the Atlantic, have backed-up to seven-month highs. At one point, the US 10-year Treasury broke through the 4% barrier. One reason for the back-up is the optimism surrounding a swift recovery, and thus the subsequent rise in risk appetite. This has driven a bizarre pricing-in of monetary tightening by central banks to counteract a rise in inflation. We believe thi...