Four Charts That Will Make Bond Vigilantes Shriek In Terror

Click this link. It’s to a Google News search for the term “Bond Vigilantes” and as you can see, everyone is using it in response to the selloff in bonds. Here’s Randall Forsyth at Barron’s warning that the bond vigilantes might kill the tax deal! Here’s economist Ed Yardeni saying they’ve been “woken up”. Nouriel Roubini is saying the same thing.

But we don’t want you to lose sleep, or have your holidays ruined by fears of an Ireland like meltdown, so we wanted to show you a few charts that will make you feel better.

First, the long-term 10-year yield. See that very, very tiny bump at the end. There’s our “bond vigilantes” at work.


Next: 10-year chart of 10-year yields and the S&P. Notice anything? They tend to move hand in hand, but the 10-year has a lot of catching up to do. Just saying.


Next: The 10-year yield against our national debt. See any correlation? We don’t, except, oddly, that as our debt has exploded higher, yields have only gone south. Huh.


And, finally, along similar lines, the 10-year against the annual deficit since 1980. Again, we don’t se any real correlation.


Conclusion: Maybe our debt has absolutely nothing to do with the rise in yields?

If you come across a bond vigilante — in a nightmare, perhaps — show them these charts and they’ll disappear.

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