Gertjan Vlieghe talks about the rise in government bond yields. He says it is not due to rising inflation worries or high government debt. Instead the increase is almost entirely because of the improved economic outlook in the UK.
10-year yields are still very low relative to the past. They have just recovered from last year’s weakness caused by Covid.
Inflation indicators (from surveys and financial markets) are that inflation will be close to the 2% target in the longer term. But the surveys or markets do not show significant concern about higher inflation.
What are government bond yields telling us about the economic outlook?
