Machine Learning

And that brings us to a big question why are bond yields so low and why has this phenomenon been going on for the last several years? It is a puzzle we have been trying to solve for some time but the more we learn, the less we understand The orthodox view is that it is a rational response to the economic conditions The argument goes that the economy is still fragile, unemployment is high and inflation is low, so people are not demanding much of a return on their investments But we have been here before In 1999, the world was in the midst of a technology bubble, the Nasdaq index was hitting record highs and Australia was in the midst of a construction boom with house prices rising by more than 15 per cent year-on-year in some markets Yet the bond market wasn't behaving like this Ten-year bond yields were 4 5 per cent Low bond rates happen every decade as a result of central banks buying bonds The first time was in the late 1940s, when 10-year yields dropped to about 3 per cent The next time w