Sorry Joe, let me step back through the sequence of events.
It was you that initially made the claim that the bond markets were pushing up interest rates because they no longer believe in the "no inflation" narrative. Here's your exact quote:
It was after this that I said anything about bonds or inflation.
That's absolutely fantastic Joe. But did you realise the word 'inflation' isn't mentioned once? When you look at the widening spread between German and Italian bonds it tells us nothing about inflation, but it more to do with a perceived credit risk (if you look, the spread was at a low point immediately after the new Italian government was formed back in February).
Spurious??? Do you know the meaning of the word?
It's the official website of the French debt management agency. The ".gouv.fr" extension means it's an official French Government website.
Since you seem to be having trouble accessing the site, here are the inferred inflation predictions, using French 10 year OATis with a 2028 maturity for selected dates:
15/01/2020 1.00% (i.e. 'pre Covid')
10/4/202 0.36% (exactly 1 year ago: it's low point was actually on 23/3/2020 at 0.02% when it looks like we could be potentially entering recession territory)
26/2/2021 0.84%
Fully agreed. It's all just predictions, and reality could turn out very different.
However, I find your line of argument interesting. It was you who first said that the bond markets were pushing interest rates up because they expect inflation. Yet when you're provided with evidence of what the bond markets are actually predicting, suddenly the argument changes to "the bond markets are wrong".
To be clear, I believe everyone is entitled to their opinion.
Do I hold the bond markets opinion with a Holy Reverence? No. However, I do give a considerable amount of weight to a market which is backed by hundreds of billions of Euro plus additional trillions of Euro of derivatives. There is an extensive derivatives market outside of the bond market where the bets are all going the same way. If you wanted to you could call the derivatives trading desk in Barclays on Monday and they would take the other side of an inflation bet for you. The inflation element has very little to do with the ECB being forced to buy bonds. I would expect that the market is pretty efficient at making predictions, based on the information available at that point in time.
You are of course entitled to your opinion, but please forgive me if I don't give it the same weight.
What seems to be missing in the whole thought process is that the ECB actually WANTS a bit of inflation. So when they step in to keep borrowing costs low, it's not to stop inflation but to try trigger it. As you can see from the data above, the inflation expectation was at it's lowest point before the ECB stepped in with a bond buying programme - interest yields went down, and the inferred inflation prediction went up.
I'm happy to continue to discuss this further, but if you're going to argue with me by going down a "you said, I said" rabbit hole, please have the courtesy to be factual. And you might make it clearer in your posts what is opinion vs what you are stating as fact then I might refrain from correcting you where what you really intended as an 'educated guess'.
If at any point you think I've overstepped a line, there's a little 'Report' option at the bottom of all my posts so that you can report them for a moderators attention.