To sustain a panic, it takes a lot of energy, a constant flow of fear and confusion to power the flight instinct.
In the bond market, the panic that has sent interest rates surging
has certainly fed on plenty of worry and has already carried on a long
time. The yield on the 10-year Treasury note
has shot from 1.63% in early May to a two-year high above 2.90% this
week, scaring tens of billions of investor dollars out of bond funds and
raising the price of credit across the economy.
Source: Yahoo Finance
The move from historically low
rates to something closer to “normal” levels has been driven by better
confidence in U.S. economic growth and the related guidance by the
Federal Reserve that it intends, before long, to scale back the pace of
its bond-buying stimulus plan from the $85 billion monthly clip it’s
employed since September. (more)
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