A man wearing a protective face mask walks by 14 Wall Street in the financial district of New York, November 19, 2020.
Shannon Stapleton | Reuters
A volatile environment for government bonds is reflecting a highly uncertain future for the U.S. economy, pointing to both slower growth and stubborn inflation.
After a burst higher earlier this year that scared markets, Treasury yields have fallen back sharply as investors have switched their focus from worries about price increases to the potential that the rapid burst in post-pandemic activity could start to slow down.
In the 1970s, the mix of higher prices and lower growth was called “stagflation,” a pejorative that has garnered little attention since then as inflation has remained tame over the past few decades.
However, the word is coming up more and more these days as the growth picture gets cloudier.
“The market is trading on the stagflation theme,” said Aneta Markowska, chief financial…