Earlier this decade, policymakers viewed low long-term bond yields as a “conundrum”. Now, with the global economy sinking and deflation looming, low bond yields are part of the solution.

The health of the financial system can be gauged by a look at where long-term bonds are trading. By virtue of its risk-free status, government paper is liquid and yields react very quickly to the backdrop of actual and perceived changes in the economy, investor sentiment and monetary policy.