Who knows best: Alan Greenspan or the bond market? This is a question Mr Greenspan himself seems to be pondering. For months now the chairman of the Federal Reserve has said he is baffled by the behaviour of the bond market and hinted that he believes yields should move higher. But the market refuses to budge. Last week the yield on 10-year Treasury bills drifted back below 4 per cent.

Seven months ago Mr Greenspan appeared confident he was right and the bond market was wrong. He warned that anyone not properly hedged against rising rates "must be desirous of losing money". In February he described bond prices as a "conundrum" adding that this might be a "short-term aberration". Now he seems a fraction less certain.