'We've got the federal deficit widening when the economy is doing well. And I think the bond vigilantes are quite concerned about that.'
Silhouette of cowboy on horseback.Bond vigilantes are "saddling up" again as federal deficits balloon, said market veteran Ed Yardeni.
Bond vigilantes are getting ready to throw their weight around the Treasury market as the federal government's budget deficit is set to balloon, according to market veteran Ed Yardeni. That's because federal deficits have historically widened during recessions while the Fed is cutting rates, Yardeni explained.
By the end of the year, however, he still sees the S&P 500 rebounding to the 4,600 level and climb to 5,400 next year. "But I think in the short term, it's why the market has been down since the end of July."The perceived power of bond vigilantes was famously illustrated in the early 1990s, when US yields jumped as investors dumped Treasurys amid fears about federal deficits in what became known as the Great Bond Massacre.
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