Bonds are back.

Australian 10-year bonds are set for their best week since May as yield on Treasuries fell for a fourth day on Wednesday, marking their the longest stretch since the lead up to June’s Brexit vote. And pretty much every major sovereign debt from Japan to Germany is gaining.

The equity market rally, which pushed US equities to a record, appears to have run out of steam. Instead investors, apparently tired waiting for President Trump to announce his economic stimulus measures, are piling into bonds and gold once again. They are also questioning the reflation theory and preparing for more political uncertainty as a series of European elections loom.

Larry Fink, CEO of Blackrock, said US Treasury 10-year yield could drop under 2%. They were at 2.34% a short while ago.

This chart shows the fall in Australia 10-year bond yields

And this one the US 10-year yield drop

“The lack of wages and core inflationary pressures, the absence of action on a fiscal package in the US and rising political uncertainty, have made investors increasingly question the case for higher yields,” ANZ Bank strategists Martin Whetton and Katie Hill said in a note. “We hold our view that yields are in a higher range for now. The risk environment has lifted in recent weeks.”

While headline inflation has lifted sharply across the world, core inflation has refused to budge with economists from Goldman Sachs saying last month global reflation is an illusion and they don’t expect either the the Bank of Japan or European Central Bank to taper. Data also showed January wages in US grew a lower-than-expected 2.5%.

The European Union is facing a new risk at Dutch elections in March and the French elections in May with eurosceptic, populist parties in both countries are expected to make huge strides.

The German vice chancellor and economy minister Sigmar Gabriel warned that the European Union “could fall apart” if populist parties got into power in the Netherlands or France. Even Germany hasn’t been spared from that wave with the anti-immigrant party Alternative für Deutschland (AfD) gaining support following a huge influx of refugees.

The Australian 10-year yield, which peaked at more than 2.9% in mid-December has slipped about 16 basis points this week. It was at 2.65%, a short while ago, near levels unseen since November. At times of risk aversion investors prefer Australian government bonds, which offers one of the highest yields among nations with a top credit score.

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