Bond Yields: A still modest retreat

US bond yields have been below 5% for almost four years. That may be long enough to seem normal. But the 0.4 percentage point increase to 4.8% since the beginning of 2006 is a reminder that yields can go significantly higher. Credit markets should beware. There have been three big shifts in US finances over the last three years. First, the rate of consumer price inflation has risen from 2% to 4%. Second, the ratio of the current account deficit to GDP increased from an already high 4.7% to an as...