by John Carney
Breitbart.com
Don’t Hit the Bond Market Panic Button
Many Wall Street pundits were quick to hit the panic button after Wednesday’s soft 20-year Treasury auction. Yields jumped. Stocks fell. And commentators wasted no time diagnosing a crisis.
James Mackintosh of The Wall Street Journal captured the nattering negativity of the nomenklatura perfectly, likening the bond market to a broken toilet: you only notice it when it overflows.
In his telling—and in the dominant narrative—the auction reflected a loss of confidence in U.S. fiscal policy. Investors are supposedly demanding higher yields because they fear spiraling deficits and a lack of political will to fix them. The dollar’s drop and the spike in long-end yields were cast as a fear trade, a flashing red light of fiscal breakdown.