Investment grade bond yields have been falling in tandem with global growth forecasts over the past 7 months again, leaving the consensus, who are expecting a pick up in inflation, on the wrong side of the trade.
This segment offers a good summary of some of the reasons that present inflation expectations are likely to continue to over-estimate as demand and growth continue to slow. Here is a direct video link.
The largest factor not mentioned in the clip however, is debt. Debt is future consumption denied, and the world has tried to borrow its way out of the debt crisis of 2007-08 by adding on trillions and trillions of more debt every year since. The weight of this debt at all levels of the economy now from households to governments and large cap business has left a large hole in potential demand over the next few years. This means, slower growth and disinflation, not to mention necessary deflation in financial assets as markets finally recouple with the reality that the world economy is driven by customers not central bankers.
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