Higher-than-expected inflation rates, the prospect of an acceleration in economic growth after the pandemic is over and central banks warming up to fight currency devaluation are driving higher yields in bond markets around the world.
The volume of bonds with negative nominal yields has fallen significantly since the beginning of the year from 14 to 6 trillion dollars.
This trend can also be seen in the euro zone: German Bunds with medium and long remaining terms are now showing positive yields again.
At the same time, the prospect of a gradual departure from what had been a very expansive monetary policy for a long time is creating textbook-style larger yield differentials between bonds with very good credit ratings and bonds with weaker credit ratings.
While bonds with a very good credit rating remain in demand as a safe investment, holders of bonds with a weaker credit rating want a stronger increase in yield as a risk premium.