US bond investors tend to overestimate inflation

New York

INFLATION is the big enemy of the bond market. But bond investors, it turns out, tend to overestimate their foe.

Since at least 1999, inflation has rarely been as bad as the US$12.7 trillion Treasury market has suggested, data compiled by Bloomberg show. In fact, even after investors scaled back their expectations, they still often overstated how much consumer prices would actually rise.