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After a relentless surge in long-term interest rates since the summer, which has made everything from mortgages to government borrowing more expensive, this week seemed like it had brought some measure of calm. It’s unclear if that will last.

Yields rise when the prices of bonds fall, and the bond market has seen a sharp sell-off since July. The reasons are complex, and include concerns about deteriorating government finances. But long-term rates have also been powered more recently by the surprising strength of the U.S. economy, which has sparked fears that inflation will remain stubbornly high and force the U.S. Federal Reserve to keep its short-term lending rate higher for longer.

Last week yields on long-term U.S. and Canadian government bonds surged to 16-year highs, before easing slightly this week. Might this be peak yield?

Some market watchers think so. A poll by Reuters of more than 50 bond market strategists, conducted Oct. 6 to 11, found most respondents believe long-term rates have stopped rising and that the yield on U.S. 10-year Treasury notes, an important benchmark for lending markets, will drop to 4.25 per cent by the end of the year.

One reason for that optimism is the belief that steep long-term rates have taken over some of the heavy lifting from central banks in the inflation fight. As the yield on 10-year Treasury notes has soared, that’s spilled over into higher costs for mortgages, auto loans and credit cards, not to mention more expensive loans for businesses.

If all that kneecaps the economy, the U.S. Federal Reserve may get the cooler inflation it wants without further rate increases, as several Fed officials have noted over the past week.

However, Thursday’s U.S. inflation report has already put that thinking to the test. After the annual pace of consumer prices rose slightly faster than expected at 3.7 per cent, 10-year bond yields inched back up after two days of declines.

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