Hmmm... Interesting that the yield on the 10 year has bottomed and moved steadily up since the middle of march.
Here's what I posit - this is the dreaded inflation expectation. The Bond Market believes that rates are headed higher in the medium term, because the Fed (and other Central Banks) must start to pay heed to inflation.
Here's the 1 Month
Notice how this has started moving up at about the same time. If the Bernanke Fed were to raise rates at this juncture it would mean a total implosion of the US (and quite possibly global) Banking System. But if they don't ... the Bond Market is going to force their hand.
In the 1980s and early 1990s the fixed income investor was notorious for selling (and driving up yields) at the slightest whiff of inflation - these so-called bond vigilantes had promised never-again to believe the Central Banks. Since then they've gone the way of Chandler, Ross, Monica, Joey, Phoebe and the blonde chick who married Brad Pitt - yes to retirement....
But like the Ronin in Yojimbo is the bond vigilante back?
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