Well, it’s begun. The curve-wide bond selloff has prompted lots of talks to talk about “Bond Vigilantes” (just heard on CNBC, for example), and the notion that people are selling off bonds because the tax deal will blow out the deficit.
Anytime you hear someone repeat this nonsense, just show them this chart which shows the connection between higher yields, and the higher appetite for cyclical stocks. The bond selloff represents a thirst for risk, not a fear that the US is about to become Greece, because really, if it were going to become Greece, then risky US equities would not be the place to invest.
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