Stocks Say Covid Recovery Is Nigh. Bonds Tell a Different Story.

After the Covid-19 vaccines proved effective this month, almost every corner of the market signaled that a faster recovery is on the way. Economically sensitive stocks, industrial metals, crude oil, the flakiest junk bonds: all have rallied hard. But not Treasurys.

The vast U.S. government bond market is usually highly sensitized to growth prospects, and especially to what’s known as the “reflation trade”: The bet that the economy will rebound quickly. Faster growth almost always means higher inflation, higher yields and so…

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