Initially, the repricing in the bond market was associated with additional volatility in financial markets. Subsequently, conditions settled down more quickly than they did in March/April last year, although further bouts of volatility are possible.
The move higher in bond yields since November mainly reflects a lift in investors' expectations of future inflation, although there has also been some bring forward in the expected timing of future policy rate increases. The lift in inflation expectations is evident in the graph below (Graph 6).