Inflation Collides With Growth Fears to Trigger Big Swings in the Bond Market

A battle has broken out in bond markets, pitting investors’ fears of inflation against their concerns about slowing growth. The result is heightened volatility and a cloudy outlook for other investments.

Recent data showing inflation broadening and accelerating drove up Treasury yields last week, but the climb obscured outsize swings. In just one 15-hour stretch on Thursday, the yield on the benchmark 10-year U.S. Treasury note started at around 3.2%, climbed to roughly 3.5% and then fell to 3.18%, charting a gain and a loss that in a different time could each have taken weeks. Yields rise when bond prices fall.

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