Government bonds back on safe ground

Government bonds are starting to stabilise after a brief hiatus due to inflation fears. Central bank...

Government bonds are starting to stabilise after a brief hiatus due to inflation fears. Central bank statements have been mostly soothing. The BoE has been comforted by a lack of second-round inflationary pressure, while the US Fed has indicated the endgame for the interest rate cycle is now coming into view. The European Central Bank raised rates for the first time since June 2003. In the US, the Fed chairman designate Ben Bernanke will be handed a 4.5% bank rate and a neutral statement when he takes over in February. Room for manoeuvre should be increased by a minimal pass through of hea...