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Bond Vigilantes May Be Wearing Out Welcome
It wasn't so long ago when everybody who's anybody feigned nostalgia for a time when the bond market served a check on "bad" policy and the "worst" impulses of politicians.
Modern day bards told (sometimes tall) tales of yesteryear's bond vigilantes, whose exploits were exalted in overwrought terms -- what, after all, could be more noble than colluding to drive up borrowing costs for governments as punishment for the perception of fiscal largesse?
But, as Bruce Wayne will attest, hero vigilant
It is interesting that banks haven’t underperformed during the 10Y’s surge. With AOCI to be phased into regulatory capital (admittedly over 2 years) and minimum capital ratio proposed to increase (the industry is opposing), you’d think that a 100 bp rise in long rates would increase the risk of dividend cuts or worse.
Another tour de force from our Dear Leader trying to explain the ratifications of rampant speculation.
The folks behind this don’t give a damn about the damage they are causing to vast numbers of people.
In this case to people all over the world, many in countries with minimal safety nets. The dollar and yield rampage is causing major problems outside the US. But as a revered former Fed Chairman once more or less opined, “That’s their problem. We cannot consider that in our deliberations.”
And then we wonder why foreign governments are so reluctant to support US initiatives to isolate China which harms their own companies which rely on sales to the Middle Kingdom.
But, you can’t afford the largest homes in the Hamptons or in the most exclusive enclaves in Colorado or Florida if you bother to ponder such woke nonsense, can you.