Part 2/17:
Alden emphasizes the significance of the bond market as a key driver in recent developments. The yield on the 10-year Treasury, which had been anchored at around 0.5%, is now approaching 1.5%. This spike, driven by a swift reversion of bond yields to levels above the expected inflation rate, is causing disorderly market behavior. She explains that central banks are caught in a delicate balancing act—intervening through yield curve control in countries like Australia and Japan, trying to prevent yields from rising too far, which risks complicating monetary policy and potentially triggering inflationary spirals.