A gauge of government bond yields around the world fell to an 18-month low as tumbling oil prices push down inflation expectations and economic growth falters.
The average yield among securities in the Bank of America Merrill Lynch World Sovereign Bond Index dropped to 1.59 percent at the end of last week, the lowest level since May 2013. Australian 10-year yields dropped below 3 percent for the first time in two years.
“There’s a decrease in inflation pressure and inflation expectations,” said Hiroki Shimazu, the senior market economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-largest publicly traded bank. “It’s supporting the bond market globally.”