The global bond rout is accelerating and it’s starting to look like inflation concerns are only part of the reason. Benchmark 10-year Treasury yields jumped above 1.70% overnight even as the Bloomberg Commodity Spot Index heads for its biggest weekly slide since August. The more likely driver for yields is the near certainty that the Federal Reserve will soon taper bond purchases. Indeed, yields look like heading for a similar yearly increase to 2013’s 127-basis point advance after then-Fed Chairman Ben S. Bernanke pulled the plug on QE. Stocks are also massively outperforming bonds to echo the last taper. There’s some anxiety out there that central banks will end up being pushed by inflation expectations and investor concerns to tighten fast enough to sap the economic recovery. Next year could then see a similar slide back down for yields.
