The Pandemic Isn’t Over Yet
New infections may be about to rise in Europe
The bond sell-off this week reflects a very bullish consensus about the pace of recovery from the pandemic, which we believe is not supported by the data. Daily infection rates have stopped falling in the EU and the governments of Germany, France and Italy may be forced to increase restrictions on mobility and economic activity. This would send a shockwave through bond markets – certainly in Europe and probably the US.