The U.S. has not been marching alone here. Markets from Japan to Europe and beyond have all had good years. It seems bond investors are still in that dream. Globally, things weren't much better as interest rates have crept up around the world on inflation fears stemming from recovering economies. And this is the paradox.
Stronger economies mean higher rates of GDP growth, more employment and better profitability.
Equity investors around the world see this and smile. Bond investors, and it seems most central bankers, frown. The basic assumption is that economies around the world cannot continue to expand without eventually leading to a deteriorating inflation picture. What this ignores is the impact of productivity increases, which have been great in the U.S. recently, and the significant capacity that still exists in most places around the world. There is simply too much competition to allow meaningful price increases.