What are the bond markets telling us?

It is likely that the market is anxious about a widening fiscal gap adding to extant inflation pressures bred by both domestic and global factors

John Carville, the lead strategist of the first Bill Clinton presidential campaign, is reported to have claimed, “When I die I want to come back as the bond market because apparently it’s more important than the f***g Pope!” Carville did have a point. The bond market might not have the oomph of the stock-market but it tells us, in one lithe movement of the bond yield, a myriad of things — investor expectations of inflation and growth, the likely monetary policy path of the central bank, evolving liquidity dynamics and the fluctuations in the fiscal balances of the government.

So what’s