For investors holding bonds yielding 9%, lower rates will mean that demand for access to those 9% interest payments will drive bond prices higher as the market moves to equilibrium with current rates.

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TOKYO A week after Japan's central bank started a huge bond-buying campaign to drive down yields in the country's quadrillion-yen government-bond market, yields instead have risen, a sign of the huge headwinds the bank faces in its push to end 15 years of deflation.

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It is declining growth prospects that have helped to drive down bond yields across large parts of the developed world in the past few weeks - at least those parts of the developed world that are not being punished for joining the euro.

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The underlying complaint is that speculators drive up bond yields, making it harder for governments to finance themselves.

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Deep down, Europeans probably knew that they could not go on living beyond their means for ever, even if it took the bond markets and German finger-wagging rather than bold politicians to drive the message home.

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That has helped drive up long-term bond yields from 2.53% the day after the Fed's announcement to 2.8% now, precisely the opposite of what QE was meant to achieve.

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