The time to sell bonds is not after yields decline. We believe investors should consider underlying risks, such as the threat of inflation, historically the key driver behind rising interest rates, rather than focus on the level of yields.

Judging from an array of indicators - from core inflation to commodity prices, measures of money supply and estimates of spare capacity - investors may want to keep calm and carry on, maintaining their allocations to fixed income and seeking the carry that comes with it. At some point yields will rise, but we expect they will not rise as much as they have historically, and this is, in large part, because the global economy of the 21st century generates structural excess demand for bonds.