Exchange rates and bond yields

Would you pls help summarise the relationship between exchange rates and bond yields?? The US - UK example in the notes has me completely confused

 

Hi Mr Hales.

What i'd really like to know is what happens to bond yields when the exchange rates increase? Is there some way to understand this like the relationship between bond yields and interest rates - like for ex. if interest rate increases, bond price falls and yields rise?

PPP and exchange rates i can understand, but how does that fit in here?
Im so sorry but try as i might Im unable to wrap my head round this

 

An increase in the FX rate means that domestic currency is depreciating against the foreign currency. This in general implies an oversupply of money in the forex market in particular and in the economy in general (reverse is true for supply /demand of foreign currency).

In such a situation,if the central bank does not lead an sterilization program, this will mean a monetary expansion in the economy, leading possibly to hardening of bond prices, or worsening of yields.

this is one of the many possible explanations. Another one is that a depreciating currency will mean a higher inflationary expectation, particularly when the economy has demand inelastic imports (like fuel). In this scenario too, the rates will go up to compensate the investors for higher expected inflation premium for fixed income products.