A bond bubble could be far more dangerous than an equity bubble, Great Moderation, Secular Stagnation
Despite high nominal yields on 10-year US Treasury bonds, the yield after expected inflation is around 2%, indicating that the market is not worried about debt.
From Great Moderation to Great Stagflation
A bond bubble could be more dangerous than an equity bubble, as a drop in bond prices would reprice risk throughout the economy,
causing disruptions and potentially leading to liquidity issues for banks and corporations.
There is a popular notion that bond traders can see the future, that they know what inflation will be or if a recession is coming.
But bond markets are often wrong. And they may be wrong now because bond yields are low relative to the risks the economy faces.
Allison Schrager Bloomberg May 4, 2026
QE 10 år med nollränta
Weak growth argues for a cut in interest rates but higher inflation argues for an increase.
ECB president sounded hawkish and the money markets think that a rise in rates is now a near certainty for June.
They also anticipate two further increases this year.
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