Minor positive data may lead to rise in government bond yields

ON BONDS

DIPANKAR SHEWARAM, portfolio manager at Legg Mason affiliate Western Asset Management on Bonds

Financial markets have experienced significant volatility over recent months, as the debate raged over the state of the global economy, including whether inflation or deflation was the larger threat, the possibility of a double-dip recession in the US, the need for a second round of quantitative easing by the major central banks and the long-term sustainability of the European Monetary Union (EMU). Against this backdrop, markets swung between bouts of risk aversion, taking refuge in government bonds, and periods of risk taking, benefiting the credit sectors. Although global economic g...