Bond market yields imply gloomy growth prospects

Very strange things have been happening in government bond markets. The yield on 10 year US bonds is currently around 2.25 per cent. It makes intuitive sense that the Germans, with their longstanding reputation for fiscal prudence, are enjoying a much lower rate, some 0.8 per cent. Similar levels obtain in most of the countries which we might now reasonably think of as Greater Germany, those with close ties to the Federal Republic. So rates are at or below 1 per cent in countries such as Austria, the Netherlands, Finland and the Czech Republic.