, Columnists
Bond Market Is Downgrading the Prospects for Inflation
The synchronized global economic growth that began in October 2016 is fading.
Bond traders don't see inflation.
Photographer: Kazuhiro NogiThis article is for subscribers only.
The recent surge in stock volatility has captivated the financial community. Throughout the swings, however, bonds have remained unusually calm. The markets are so disconnected that when the Dow Jones Industrial Average tanked more than 400 points on Friday amid concern China would sell its hoard of more than $1.1 trillion in U.S. Treasuries in retaliation for the Trump administration's proposed tariffs, bonds barely budged.
If that episode couldn't move bonds, what will? At this point, only the return of inflation will bring volatility back to the bond market, which is something fixed-income investors don't seem to believe will happen anytime soon.