Quick heads up.
US borrowing costs are rising today, in the wake of the Fiscal Cliff deal.
The yield on the 10-year bond are ticking up to 1.8178%.
It has nothing to do with the deficit or the debt.
It’s just that this deal averts some concerns for the economy, and that means that safe-haven buying of US Treasuries goes away. It’s a good sign.
We think it’s important to bring this up now, because it’s only a matter of days before outlets like the WSJ start talking about how bond vigilantes are rebelling against large deficits. It couldn’t be further from the truth.