The chief investment officer for Core Investments at AXA Investment Managers
under BNP Paribas Asset Management inflation said matters more for bond yields
than fiscal considerations. Governments can try to limit issuance, but since the
global financial crisis central banks have struggled to control inflation and
monetary policy has been weakened. He added this does not downplay deficits and
debt—profligate fiscal policy can still provoke bond vigilantes. If bond buyers
are confident in preserving the real value of their holdings, high levels of
government bond supply will be easier to absorb.
