Forgive us for practicing penny-ante philosophy, but basically Occam’s Razor is the idea that the simplest solution to a question is usually correct.This is something to bear in mind as folks talk about the bond selloff.
Everyone is bending into contortions trying to figure out what the bond rout means.
It’s vigilantes! It’s inflation fears! QE is failing!
On CNBC earlier, we heard it asked what to make of the fact that the bond market was saying something different than the ever-rising stock market.
David Goldman has a somewhat convoluted explanation of how bonds are diving because of deficit fears, while gold is sliding because of pushback against the Fed.
This is where Occam’s Razor comes in. There’s a fairly simple explanation: Growth expectations and risk appetite have been rising for a while, and the tax cut deal fuels that. It explains the stock market rise, the decreased appetite for risk-free US Treasuries, and sliding gold thanks to lower demands on Bernanke to print.
Why so hard?
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