Why have US government bond yields declined?

“The surprise of the year has been lower government bond yields,” says Economist.com’s Buttonwood blog.

The yield on the ten-year US Treasury has fallen from 3% at the start of the year to around 2.6% today, as prices have risen. European yields have also fallen. Yet with the global economy gathering strength, most analysts had expected higher yields – because stronger growth usually means higher interest rates.

So why have yields retreated again? Unexpectedly weak global growth earlier in the year hasn’t helped. Central banks – led by the Fed – have also made it [...]

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