What is probably going on is the following: - if inflation picks up again it will have to be controlled - going by 1970s experience it may be that an engineer

What is probably going on is the following: - if inflation picks up again it will have to be controlled - going by 1970s experience it may be that an engineered recession is required to bring inflation down - recession fears is risk-off - risk-off means go into bonds and out of stocks But yeah, inflation is a double edged sword on bonds. To some extent higher inflation expectations should mean that yields on bonds should go up to provide a consistent real return.