The Federal Reserve and other central bankers repeat that low oil prices are only a temporary blip before inflation moves up but the bond market doesn’t listen.
US 10-year yields are at 20-month lows at 1.823% and the yield on the 30-year bond is at a record low of 2.39%, down 910basis points today.
It’s easy to blame QE or ZIRP but Canadian 10-year yields also just fell to a record low at 1.54% and the BOC rate is at 1.00%. UK 10-year rates are below 1.5% for the first time since 2012.
Maybe the simple answer is the right one: This is the age of oversupply and we’re headed for global deflation.
