Governments around the world have been able to issue vast quantities of IOUs without disturbing the price of this debt. Some governments are even paid to issue debt.

Government actions have cushioned economies and central banks have stepped up with renewed quantitative easing (QE). This interaction of fiscal and monetary policy has meant that equity prices, bond yields and commercial property valuations have not reflected the economic upheaval we are experiencing. In the UK, QE has been expanded so that by the end of next year, assuming no further expansion, the Bank of England (BoE) will own almost £900bn of UK government debt and total government debt will equate to £30,000 per head, and this does not include unfunded pension commitments.

The reason that UK bond yields are so low in the face of large supply is twofold: the economic shock has further pushed down real yields and the extra supply of debt resulting from this shock has been

neutralised by the BoE. This is a global phenomenon and is not uniquely British.

Read article in full from Outlook 2021