How to think about the bond market sell-off

The recent bond market sell-off appears to reflect investors demanding greater compensation for fiscal, geopolitical and policy uncertainty. We expect this shift to prove relatively persistent. The direct macroeconomic impact should remain limited absent a broader tightening in financial conditions. But with governments reluctant to pursue meaningful fiscal consolidation and central banks constrained in their response, bond markets will remain vulnerable to renewed bouts of volatility in the quarters ahead.