In the United States, 10-year Treasury note yields were below 5 per cent over several years, which stands out compared with the history of the preceding few decades. Furthermore, it is historically unusual for these rates to have been low and pretty steady at a time when the Fed is raising short-term rates.
That this would coincide with a sizeable US budget deficit, and a US current account deficit of unprecedented magnitude, was certainly not anticipated by any observer I can recall. It was labelled a “conundrum” 3 , and “an intriguing financial phenomenon” 4 by successive Fed chairmen.