Kames' Hull: Why there are so many 'rampant' bond bears

Pick-up in US GDP and inflation

Bond bears are rampant at the moment; for the US it is the first time in over five years there has been a step-change in policies to justify higher bond prices.

US President Donald Trump's election and expectations of fiscal spend have pushed 10-year US treasuries 1% higher over the last six months. Underlying this too has been a material pickup in GDP growth in the second half as well as consumer confidence. Higher headline inflation, with US CPI pushing towards 2%, also justifies higher yields.  Moreover, the Federal Reserve has signalled that 2017 will see the end of its emergency rates policy and a normalisation of short rates with at least two further rate hikes.  What happens in the US often hits the UK nine months later. With higher...