LONDON, July 7 (Reuters) – An economy powering back from the COVID-19 shock and resurgent inflation is yesterday’s story if the sharp rally in the world’s biggest bond markets in the last 24 hours is anything to go by.
Prices on U.S. 10-year Treasuries have shot up, pushing yields down 8 basis points on Tuesday in their second biggest daily drop of 2021. The rally accelerated on Wednesday, with yields falling to just below 1.3%, their lowest in over four months.
British gilt yields fell to a similar low while German Bund yields — which looked set to push above 0% in May — have dropped to -0.3% , .
Various explanations have been proffered: a squeeze on investors who had bet on yields rising, softer-than-expected economic data and concern about COVID variants.
Push past the noise and the real message from sovereign bond…