Thursday, December 9, 2010

Bond Vigilantes vs. the Tax Deal

Hitting federal finances adversely,
It caused T-bonds to tumble down tersely;
The effect on bond yield
Of this tax-cutting deal  

In relation to price, went inversely.

The tax rate compromises agreed upon between President Barack Obama and Congressional Republicans sparked a sell-off in the Treasury bond market.  Sellers, characterized as "bond vigilantes" for their willingness to call politicians to account, demanded higher yields for the perceived higher risk of a future US fiscal crisis.

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