Bond Market Reprices for Higher Inflation and Tighter Central Banks
Global bond yields remain near their recent highs, with investors demanding a higher price to own duration. According to George Cole at Goldman Sachs, this is not just a technical accident or a result of forced selling.
The market is repricing for a world where inflation has multiple routes back into the room, fiscal supply is no longer background noise, and central banks have less freedom to look through energy shocks.
The US front end has regained control of Treasury curve behavior, making next week's inflation data a decisive input into September Fed pricing. European rates remain hostage to natural gas, but Bunds appear better insulated than Gilts.
In Japan, the curve is undergoing a genuine regime change as higher front-end rates flatten rather than steepen the JGB curve. This suggests that global bond yields are not just influenced by technical factors, but also by fundamental changes in the economy.