Add together the purchases of global central banks, domestic central banks (via QE) and financially repressed institutions, and well over half of British and American government bonds may be owned by investors who are relatively unconcerned about low yields. Mutual-fund and hedge-fund managers, more bothered about making a decent return, are thus hard put to play the role of vigilantes, so the state of the market is no longer the economic signal that once it was.
This division of bond markets into a premier league (of governments that can borrow at less than 2%) and the minor leagues (of those paying 6% or more) is a great advantage to those countries in the former category. America and Britain, in particular, can finance very high deficits (by historic standards) without feeling under pressure. Indeed, despite many years of current-account deficits, both countries have a surplus on their investment-income accounts, largely because foreigners earn such low yields on their dollar and sterling deposits and bonds. It is a neat trick: buy real goods and services from other countries and sell them low-yielding pieces of paper in return. And it looks like one that may have a fair bit of mileage left. Investors starved for choice may not relish yield-free bonds. But they seem likely to keep buying them.