Commentators have been perplexed by recent strength in government bond markets, especially set beside continued resilience in equities. They should not be, says Albert Edwards, global strategist at Société Générale.

“Once again, equity participants are missing the big picture. For despite clear signs from the business surveys of some sort of second half recovery, firm evidence is emerging that the global economy is sliding towards a full-blown deflationary episode once this recovery falters.