Investors worried in the markets

Frank Wiebe The buzzword in the markets is again “inflation”. Fear of “stagflation” is also being discussed more and more frequently, that is, when inflation and a weakening economy come together. But what signals do bond yields give, which are ultimately the basis for events in all sectors of the capital markets?

As inflation rises, so do interest rates. They do that now – but especially with the short terms. At the “long end”, as it is called in the jargon of the markets, the conditions move less.

The result is that the yield spreads of the various maturities merge – the yield curve becomes flatter. A study by JP Morgan states: “US Treasury bond yields have fallen over the past week, while long-term expected inflation has risen.”