Falling inflation expectations in US bond markets are flashing warning signs that markets may stay volatile, and adding to fears about the slowing global economy. Inflation-linked markets have been pricing in increasing doubts that inflation will recover, which is a worry as they have been one of the first markets in recent years to anticipate slowing growth. “In the last year or two, inflation break-evens were well ahead of the market in terms of looking at the global growth problems that we’ve been having,” said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York. Expectations of what five-year inflation will be in five years based on Consumer Price Index swaps fell to 1.81 per cent on Tuesday, the lowest in at least 10 years. Inflation expectations based on Treasury Inflation-Protected Securities (TIPS) are also trading at the lowest levels since 2009. Deterioration in these bonds in the second halves of 2014 and 2015 foresaw weakness in global demand, while other market indicators were slower to react, said Kohli.