While world equity markets have marched to the beats of their own drummers, there has been a seismic shift in the tectonic movements shaping global bond markets in recent weeks.
On Wednesday, global interest rates, almost in unison, hit their highest levels of 2015 and, in some cases, the highest levels in about nine months.
Of course, there are a few interpretations of what may be occurring, as with the case with any sudden market movement. But, increasingly, it appears that global yields are telling us that the threat of deflation is receding, and receding more rapidly than many, myself included, would have expected.
After having fallen to their lowest levels in modern history, to just above zero, the yield on the 10-year German bund topped 1 percent this week. While that remains low by historical standards, the speed with which yields have climbed has been breathtaking, especially in a world that is still fretting about a potential Greek debt default, and exit from the euro zone, weakening growth in China, recessions in Russia and Brazil, and uneven economic indicators here at home.
Against that backdrop, however, Germany is not alone in witnessing a rapid rise in yields. U.S. 10-year Treasury yields flirted with 2.5 percent this week, also the highest of 2015.
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Is it possible that deflation, as an existential economic threat to the global economy, is dead?
It is.
First, it is important to examine all aspects of the recent rise in rates. Unconventional monetary policies, which began in the U.S., at the very depths of the financial crisis, are now being used conventionally, one might argue, almost everywhere in the developed world. Roughly 80 percent of official global rates are at, or near zero, and bond-buying programs are in vogue from Belgium to Beijing.
The massive influx of, not just domestic, but global, liquidity has halted the slide in prices in the U.S., Europe and, to a lesser extent, Japan. In addition, asset inflation is either evident, or running rampant, depending on where in the world you look.
From my vantage point, the biggest divergence between growth, economic inflation, and asset prices is in China, which still has deflationary tendencies, is massive industrial and residential overcapacity and larger internalized debt burdens than many casual observers realize.
If there is one place where government policy has led only to asset-price increases, as opposed to a resumption of growth, it is in China, which merits the most attention in that regard.
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Elsewhere in the world, however, the data are beginning to look more positive and increasingly aligned with the idea of economic normalization."Green shoots" have sprouted in the euro zone, Greece notwithstanding, while the Japanese economy has begun to move forward. Meanwhile, U.S. job growth, along with key wage measures, like the Employment Cost Index, have moved to levels not seen since the Fed last raised interest rates over a decade ago.
To be sure, the historic volatility in bond yields could be attributed to an increasing lack of liquidity in the global bond markets, as central banks buy more and more of their home country's debt, resulting in a shortage of bonds. The net effect is that it takes smaller volumes of bond trades to cause greater price swings in the market.
It's a condition that Blackstone CEO Steve Schwarzman, among others, recently opined could be the cause of the next financial crisis.
That, of course, remains to be seen, and is identified more with regulatory burdens on banks than with extraordinarily accommodative monetary policies.
Indeed, after having fallen to historic lows, this rebound in rates could merely (and I use the term "merely," advisedly), be an upward correction in an ongoing, secular bear market in yields.
But, the data are supporting the upward move. Inflation in Europe has turned up after falling into negative territory over the last several months. Oil has reversed course while other commodity prices have stopped going down, which, no doubt, will put upward pressure on headline inflation measures.
So-called "Treasury break-evens," a measure of inflation expectations, have risen recently, suggesting that the "bond vigilantes" are getting a whiff of reflation, if not, a modest, and positive, increase in inflation itself.
In short, the expansionist monetary policies of global central banks may well be working to rid the land of the scourge of deflation. And while reports of deflation's death may be premature, it seems the message of global bond markets is that we should at least be preparing its funeral rites.
Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. He is also editor of "Insana's Market Intellgence," available at Marketfy.com. Follow him on Twitter @rinsana.
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