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'Strange' bond reaction to inflation puzzles investors -- because the press won't pose key questions

Section: Daily Dispatches

Well, of course "strange" and "counterintuitive" market action is puzzling investors. For the Financial Times and other financial news organizations never put to central banks the crucial questions about their surreptitious market interventions, starting with the monetary metals markets. Everything would make perfect sense if the FT and other financial news organizations did ask. Here, once again, are a few dozen tips for them:

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'Strange' bond reaction to U.S. inflation data puzzles investors

By Tommy Stubbington and Colby Smith
Financial Times, London
Friday, July 16, 2021

A relentless rally in U.S. Treasuries has accompanied the biggest burst of inflation in more than a decade, snapping typically reliable patterns and leaving investors scrambling for an explanation for what is going on in the world's largest bond market.

Inflation is typically bad news for bond prices, eroding the value of the fixed payments the debt offers and making it more likely that central banks will respond with interest rate rises.

... Dispatch continues below ...


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But recent months have turned that relationship on its head, at least for longer-dated debt. U.S. Treasuries prices have run up big gains -- with other bonds around the world following in their wake -- pulling the 10-year yield to its lowest in more than three months this week just under 1.3 percent, down from 1.75 percent at the end of March.

"There's a lot of head scratching going on," said Mike Riddell, a portfolio manager at Allianz Global Investors. "On the face of it this move looks pretty counterintuitive." ...

... For the remainder of the report:

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