Last week's UK economic data showed that the manufacturing sector of the economy still has problems. Output is stagnant and employment is being cut back because demand remains insufficient to allow firms to reduce stocks back to their desired levels. As a result, companies are finding it difficult to raise their prices aggressively and producer output price inflation has fallen sharply over the last year.
The rest of the economy is faring a little better, as evidenced by the fall in unemployment of nearly 15,000 in May. But total output is not strong enough to threaten a rise in inflation pressures and the latest retail price data, for May, show a fall in the headline rate to 2.2%, its lowest since September 1994.
Such signs of subdued output growth and low inflation would normally be positive for the gilt market, leading to lower yields. But bond markets around the world are focused at the moment on developments in the United States.
Unless there is some evidence that the spurt in US output growth will prove short-lived, such conflicting pressures on yields - favourable domestic influences versus unfavourable overseas ones - are likely to remain.