Exact(5)
The chancellor may have taken some comfort from the fall in yields on 10-year government bonds.
Quincy Krosby, a market strategist for Prudential Financial, said the fall in yields reflected the subdued employment data.
Martin Jenkins, pensions partner at consultants Irwin Mitchell, says: "The fall in yields for 10-year government bonds is bad news for defined benefit pensions.
Output in much of the periphery is forecast to shrink this year (see right-hand chart).Most worrying of all is that the fall in yields may blunt the incentive for euro-zone politicians to take tough decisions on reforms.
Some of the fall in yields may also stem from the perceived safety of the core euro zone countries, and from the flood of cash central banks have pumped into the system since the onset of the financial crisis in 2008.
Similar(55)
So inflation expectations might fall along with nominal yields, leaving real yields unchanged.So what explains the fall in real yields that has already occurred and why can't it happen again?
Peripheral yields have been dragged down both by the fall in German yields and the narrowing of their spreads over German bonds since the height of the crisis.
Behind the slide was the fall in the yields on Treasury securities as bond prices have risen.
As a result, many firms face a higher cost of capital, despite the fall in the yields on government bonds.
The fall in bond yields in recent years has thus pushed up pension liabilities and kept many funds in deficit despite the rebound in equities.
The global free fall in yields.
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