US Bond Vigilantes: A little desk talk of these guys saddling up for a move on fiscal spending.

In case you don’t know a bond vigilante is an investor selling bonds to spike yields, with the idea to freak out the fed and pause/cap spending. Coined in the 1980’s by Edward Yardeni.

Three take outs:

(1) Do not underestimate them. The FED has previously tried and it was painful.

(2) If yields spike don’t assume DXY will follow. If market believes the cause of the move was from these guys USD could go south – or not north of course. Have fun trading that.

(3) The 100mma on the 30 year at 3.25% will smashed if it unfolds. And forget 3% on The 10 year. This will be toast.  I’ll leave you with one of my favourite quotes. Take note and be aware.

“I used to think if there was a reincarnation I would want to come back as the president or the pope, or a .400 baseball hitter. But now i want to come back as the bond market. You can intimate everybody” Edward Yardeni

Patrick Reid
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