Long-term government debt is the petrol that fuels the engine of fixed income investors such as pension funds. For years, fund trustees and managers have assumed that a steady supply of long-term US treasuries, UK gilts or euro-denominated continental government bonds would provide a steady stream of income from the safest and most liquid of investments.

However, as non-inflationary growth on both sides of the Atlantic has enabled governments to reduce deficits and even contemplate eliminating debt altogether, this cosy relationship between the markets and national treasuries has become more and more strained. The result could be a crisis in these financial markets, one which has ironically been the consequence of the prudence of central bank governors and finance ministers.