Bonds v stocks: which market is calling it right?

The government bond market, by contrast, is convinced there's a recession looming, that growth will crater, and central banks' battle against inflation will therefore succeed. The US 10-year bond yield has slumped to 3.4 per cent, well below the short-term rate of 5 per cent, while about 1.5 percentage points of rate cuts are priced in from the Federal Reserve, which is actually forecasting a recession - the most widely anticipated in history. In Australia, the bond market has taken the view that interest rates aren't going anywhere for about a decade. The government issued $14 billion of bonds with…