These are lean times for the doom and gloom crowd.
The economy seems to be doing OK, the market is rally, the dollar is higher, and gold is falling, which makes it hard to blame the whole thing on The Fed and the expectation of more pumping.
So if you’re in the business of peddling scare stories about the US economy, what do you do now?
Duh: You focus on the US Treasury market.
In recent days, the dormant yield on the 10-year has finally spiked up, moving from around 2.00% to 2.26% in a couple of sessions.
Photo: Yahoo Finance
There’s a good reason for this. Optimism is breaking out, and finally some people are shifting away from US Treasuries into riskier assets.You’re seeing the same optimism breakout in the selloff in gold and in the selloff in Japanese Yen and even German bunds.
But higher rates can always be used to scare people, because all you have to do is say “bond vigilantes” and people think that the great sovereign debt reckoning is upon us.
And, conveniently for the doomers, we got that report about how Obamacare is going to cost more than expected yesterday…just in time for the Treasury selloff.
Of course, one thing had nothing to do with each other, but just watch… a few more days of rising rates, and you’ll hear about the bond market warning of our deficits, and how Bernanke is letting inflation run away and so on.
And since thinking like this is toxic to your investing and just your understanding of things in general, we wanted to give you a heads up that it’s coming.