The developed world is much agitated by very low interest rates. So low that it is hard to imagine them declining further. This is emasculating monetary policy. These interest rates reflect a relative abundance of global savings. Hence inflation (prices rise when demand exceeds available supplies) is confidently expected to remain at very low rates. Interest rates accordingly offer compensation for expected inflation. The US bond market only offers an extra 1.56% per annum for bearing inflation risks over the next 10 years.

The US Treasury Bond Market (10-year yields – daily data)

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