The bond market sell-off and the global economy

The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in bond yields and asset prices more generally. In this note, we consider ways in which the sell-off in bonds could morph into something more serious, assess the implications for the economic outlook, and identify the key variables that clients should watch over the coming days.