Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long term bond yields have fallen in most advanced economies.

It is true that extraordinarily low long term bond yields put us outside the range of historical experience. But so would a scenario in which a sudden bond market crash drags down prices of stocks and housing.

In short, though central banks creation of macro liquidity may keep bond yields low and reduce volatility, it has also led to crowded trades (herding on market trends, exacerbated by HFTs) and more investment in illiquid bond funds, while tighter regulation means that market makers are missing in action.

NEW HAVEN The prices of long term government bonds have been running very high in recent years (that is, their yields have been very low). In the United States, the 30 year Treasury bond yield reached a record low (since the Federal Reserve series began in 1972) of 2.25 on January 30.

The bond channel doesn t work when bond yields are already low and the credit channel doesn t work when banks hoard liquidity and velocity collapses. Indeed, those who can borrow (high grade firms and prime households) don t want or need to, while those who need to highly leveraged firms and non prime households can t, owing to the credit crunch.

13. Currently, the 30 year United States inflation indexed Government Bond yields a quot real quot return to maturity of approximately 3.6 per cent per annum.

With fears mounting that one or another euro zone country may default, yield spreads on government bonds between EMU countries have reached record highs. For some time now, Greek ten year government bond yields have been about 300 basis points above German yields.

Real estate rental yields and stock market payouts are low, and real estate and stock prices may well fall as much as or more than bond prices if interest rates spike. Only businesses that can borrow long term now, lock in a low real interest rate, and invest in expanding their capacity can make the domestic bet that interest rates will rise.

Europe, gripped by a tremendous banking and debt crisis, is not an attractive destination, and loose monetary policy in the US has produced ultra low bond yields there. As a result, many emerging countries, with their higher interest rates and promising growth prospects, have become irresistibly attractive to investors.

Mr. Bond! Mr. Bond! Mr. Bond!

The financial impact was immediate in anticipation of monetary easing, and after it began, the euro fell sharply, bond yields in the eurozone s core and periphery fell to very low levels, and stock markets started to rally robustly. This, together with the sharp fall in oil prices, boosted economic growth.

During the two year period, bond yields fell in most major markets and the Fund apos s total bond portfolio had a return of 3.6 per cent for the year ended 31 March 1997 and 7 per cent for the year ended 31 March 1998.

Bond. James Bond.

Bond. James Bond.

Bond? James Bond?

Another factor impeding QE s impact in the eurozone is low bond yields, which, by increasing measured pension fund deficits, make some companies reluctant to invest and thus more likely to raise contribution rates and limit pension benefits. In the US, more generous assumptions regarding discount rates are used to calculate pension fund liabilities.

After the government announced its plan, the euro fell to its lowest level in nearly two weeks on Friday, while the Italian bond yields hit their highest level in three weeks.

But if they maintain large budget deficits and continue to monetize them, at some point after the current deflationary forces become more subdued bond markets will revolt. At this point, inflationary expectations will increase, long term government bond yields will rise, and the recovery will be crowded out.

Thus, the recent problems faced by Greece are only the tip of a sovereign debt iceberg in many advanced economies (and a smaller number of emerging markets). Bond market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.

The euro was in serious trouble, buffeted by rumors of imminent banking collapses. Bond yields in southern Europe were rising, and a pervasive sense of apprehension and fear cloaked governments in European capitals.

My name is Bond, Jamal Bond.

James Bond. Oh, yes, Mr Bond.

Another rationale for buying organic is that it is supposedly better for the natural environment. But the low yields of organic agriculture in real world settings typically 20 50 below yields from conventional agriculture impose various stresses on farmland and increase water consumption substantially.

Likewise, in October 2014, US Treasury yields plummeted by almost 40 basis points in minutes, which statisticians argue should occur only once in three billion years. The latest episode came just last month, when, in the space of a few days, ten year German bond yields went from five basis points to almost 80.

Yet practical solutions are at hand, because simple and low cost technologies can address specific problems. Low farm yields can be addressed through improved seed varieties specially adapted for African conditions, combined with technologies for replenishing soil and managing water.

Constant effort yields sure success.

Bond

Bond

Bond.

MAN ON MEGAPHONE Ahoy, Mr. Bond. Ahoy, Mr. Bond.

Similarly, with government bond yields as low as they are in the US, the public has little sense of urgency about its fiscal problems, though some doomsayers, like Peter Peterson of the Blackstone Group, have been trying their best to awaken it. One hopes that the coming US presidential election will lead to a more enlightened public debate about tax and entitlement reform.

The yields per acre of soybeans are lower than that of corns, but less fertilizer is needed, which makes the cost of soybean cultivation relatively low as a whole.

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