I just wanted to briefly talk about the bond market tonight. As I warned a few days ago, Chicago doesn't appear to be very happy at all regarding the spending that's been announced this week by the government. Specifically, I believe they are extremely concerned about the cost of the national health care bill.
We have seen this story before. The bond vigilantes came out of the wood work in the early '90's when Clinton tried to push through national health care. Yields soared when this plan was announced, and Clinton eventually backed off after being bitch slapped by Chicago via soaring lending rates.
It appears the credit market is about to shove this new national health plan right up Obama's you know what.
Take a look at the 10 year today:
Now lets take a look at the 10 year for the week:
As you can see, the 10 year has soared almost 400 basis points in just one week. This is a HUGE move folks. I don't care how how much equities soared, you don't see moves like this very often. I consider this to be a very ominous sign.Goldman and the rest of the hacks in New York may be able to manipulate the stock market, but the credit market beats to its own drum.
Higher yields will destroy whats left of the housing market. this would stop any recovery deaad in its tracks.
Keep a close eye on this next week as this health care bill continues to move through the hill. There seems to be a lot of momentum behind it and I think the bond market now considers it to be a serious threat.
Lets hope the bond vigilantes come back with a vengeance and put an end to this ridiculous spending!
For those of you that follow Karl Denninger: He will be on Larry Kudlow's show tonight at 7PM. That should be interesting to say the least. I plan on sitting back and watching those fireworks with a beer in hand!
Have a great weekend!