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Is this the start of a sustained rise in bond yields?

The recent surges in the yields of US Treasury and Japanese government bonds have led some to ask whether this might be the beginning of a prolonged bear market. Yields should of course rebound to more normal levels, eventually. But we think they are more likely to fall than rise over the second half of this year – even if, as we expect, the Fed does start to taper its bond purchases under QE3.

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