| World Government Bond Forecasts: Spain World Government Bond Forecasts: Switzerland World Government Bond Forecasts: Austria World Government Bond Forecasts: Canada World Government Bond Forecasts: Denmark World Government Bond Forecasts: The Ecu World Government Bond Forecasts: Germany World Government Bond Forecasts: Italy World Government Bond Forecasts: Greece World Government Bond Forecasts: The Netherlands The message is that some decoupling of European and US interest rates has been in progress, along with a convergence of yields within Europe itself. Given its timing, the sudden break in the market in January had echoes of the early-1994 sell-off, prompting fears that history was about to repeat itself. But world bond markets were nowhere near as overbought as they were in early 1994. Then the average underweighted yield to maturity of the 21 bond markets included in Zurich Investment Management's database was barely 5.7%. This January it was a full percentage point higher, yet inflation expectations were significantly lower than they had been two years earlier. The technical backdrop was also markedly different. The magnitude of the price collapse in early 1994 owed much to the role played by hedge funds and other highly leveraged investors. A cheap money bubble was simply waiting to be pricked. |