- Bond yields are lower than we'd expect given that the economy is recovering.
- This is because of the Fed's promise to hold interest rates down, which means bond prices could fall a lot if policy changes.
Gilts have become less cyclical.
Usually, we see gilt yields rise during economic upturns as investors sell them in anticipation of higher inflation and interest rates and switch into assets such as equities which would benefit from economic growth. In recent months, however, this has not happened to the extent it usually does.