📰The worst sell-off in Treasuries since 1787 marks the return of the Bond Vigilante: A bond market carnage worse than anything you'll find in the history books is spreading, and the consequences are dire. The massive deficit, apparently the result of Republican tax breaks and Democratic investments in green energy, didn't seem bad when the Fed set interest rates at zero and bought tens of billions of dollars worth of Treasuries every week. Free money can mask many problems. However, at today's rate of 5%, the math becomes difficult.
*Bond Vigilante is a bond trader who threatens to sell or actually sells a large number of bonds to protest or signal distaste for the issuer's policies. Selling bonds lowers their price, raising interest rates and making borrowing more expensive for the issuer.
Source: Bloomberg