Its level reflects all sorts of things, including demand from investors for bonds, expectations of future inflation and a risk premium for holding longer-term assets.

ECONOMIST: The economy

Bonds pay interest based on the expected inflation rate until maturity, plus a fair risk premium over inflation based on the riskiness of the bond.

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The expected credit risk premium over inflation from investment-grade securities is also expected to remain stable.

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Long-term nominal interest rates are influenced by many things, including investors' expectations of inflation and future short-term rates, and a risk premium for holding long-term assets.

ECONOMIST: Europe's and America's economies

Long bonds usually have higher coupons than short ones, as investors demand a premium for exposure to the risk of interest-rate rises and inflation.

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Or put it this way: The equity risk premium says that stocks have compounded four times as fast as bonds in real (inflation-adjusted) terms.

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