The most revealing market development this week was the response to better news. US inflation looked softer, employment growth disappointed and the urgency for another Federal Reserve rate increase diminished. Yet the US 10-year Treasury yield finished around 5.29%.

That matters because it challenges a comfortable assumption: that a little less growth and a little less inflation will be enough to restore the relationship between bonds, equities and monetary policy.

The front end of the yield curve can respond to a slower pace of tightening while the long e...