If you don't understand the reason for the collapse in Treasury yields, you are not alone. Jerome Powell, chairman of the Federal Reserve, is not sure.
Even if inflation rises to a 13-year high, bonds continue to rise for months. According to textbooks and Wall Street, yields should jump, not plummet, in the face of this.
The Fed chairman made some comments on the conundrum when asked this question on Wednesday.
"We have seen a sharp drop in long-term yields," Mr Powell said at a press conference after the central bank's latest policy meeting. "I don't think there is any real consensus on the changes that took place between the last meeting and this meeting."
The yield on the 10-year Treasury note fell 1.7 basis points to 1.22 per cent after the Fed meeting, continuing its decline since hitting an one-year high of 1.77 per cent at the end of March. More strikingly, the 10-year real yield, seen by some investors as an indicator of long-term growth prospects, fell to an all-time low of-1.17 per cent.
Powell does offer three possible explanations for the recent decline. This is partly due to falling real yields, and the spread of the delta variant has raised concerns among investors about slowing growth. At the same time, investors' inflation expectations have moderated. Finally, there are so-called technical factors.