Italy's 10-year government bond yield soared 0.52 percentage point to 4.88%, while the corresponding yield on Spain's bond also jumped, rising 0.24 percentage point to 5.34%.
Furthermore, central banks will presumably want to sell their bond holdings at some point, or at least not roll them over when they mature.
At some point, bond purchases will have to be greatly reduced.
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This is making Paul Krugman very happy, because he can point to bond market approval for the fiscal and monetary stimulus of the Obama administration that he has long championed.
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Essentially, the Debt Supercycle is the decades-long growth of debt from small and easily-dealt-with levels, to a point where bond markets rebel and the debt has to be restructured or reduced or a program of austerity must be undertaken to bring the debt back to manageable proportions.
Financial markets see few inflationary dangers in Britain: ten-year government-bond yields are within a point of France's and Germany's, and below America's.
As if to prove their point, the bond ratings agencies noted that delinquencies in the prime loan market had risen, but not by as much and not nearly at the magnitude of the subprime sector.
The September bond future added a half point to stand at session highs of 123-22 ahead of lunchtime shaving four pips off the 10-year yield to 2.96% and leaving it within a couple of basis points of the lowest since early December.
Spain's main stock index fell 2.6% Thursday, while the country's 10-year bond yield rose 0.04 point, to 6.59%, according to Tradeweb.
And that the bond market will crack at some point, though putting a date on that is very difficult given extreme government intervention in the market.
But with coupons closer to 3.7% today, the same two-point rate increase cuts the bond's value by 28%.
And you have to add to it, from a financing point of view, the bond issuance to refinance the banks.
At European stocks markets close, the yield on the government's benchmark 10-year bond was down 0. 16 percentage point at 5.86%, according to Tradeweb.
Either way--with a swap or a margined bond trade--you pocket the spread, unless and until the corporate bond gets into trouble, at which point you're sitting on a painful capital loss.
While Mr. Bernanke may be hearing a fair amount of cat calls from the crowd these days regarding the effectiveness of his adventures in quantitative easing, his detractors (a group that seems to be growing with each uptick in bond yields) may be missing the point.
So there's just a magic, there's a bond there that's unbreakable at this point.
Bond yields jumped a third of a percentage point on news of the deal.
If it buys government bonds, and if this increases inflationary expectations (the point of the policy), bond yields could rise.
The 20-year bond yield has moved 0.39 percentage point and the 30-year yield has moved 0.48 percentage point since the beginning of February.
Bond prices advanced by more than one full point and enough to shave 10 basis points off the 10-year yield, which slid to 3.04%.
The yield on the ten-year German Bund touched 3% last week, an historic low and more than a percentage point below America's comparable bond.
Enter Web ET, which Goldman touts as the first multi-product platform that lets bond buyers see Goldman's prices and point-and-click their way through millions of dollars in live trades.
The action scenes play well, the high point being a fencing duel between Bond and his nemesis, although a scene with Bond surfing an ice-strewn tsunami is a regrettable bust.
Our heroes in horns point to the action in the bond market, which actually saw yields fall as the day progressed, as well as the VIX, which failed to perk up on the purported game-changing event.
Investors are watching for indications that the meeting discussed unified bond issuance for the euro zone at some point in the future, which is another item that Germany has thus far rejected, saying it is too early to create such bonds.
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The point is that Italy's bond yield - the implicit interest rate it pays - is unlikely to fall decisively below the catastrophically unaffordable 7% unless and until the eurozone demonstrates that there is a bailout facility (of some sort) that has sufficient resources to lend to Italy if investors refuse to do so.
However, the model also suggests that, if lower interest rates are to revive the economy, a cut of 2.5 percentage points (the size of the cut until this week) would normally be expected to have lifted share prices by 22% within a year, reduced long-term bond yields by three-quarters of a point, and left the dollar 5% weaker.
The bond market will revolt well before it reaches that point though.
Up until this point in the European debt crisis, bond holders have been held sacrosanct as no one has wanted to even consider the far-reaching consequences of a sovereign default.
Case in point: The Barclays Long-term Government Bond Index has gained over 25% this year through November 30th.
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