Markets hated the tax cuts for the rich

Global bond rout deepens on US fiscal worries

The yield on 10-year Treasuries – the benchmark price of money worldwide and the key driver of US mortgages rates – has rocketed to 3.3pc, up 35 basis points since President Barack Obama agreed on Monday to compromise with Senate Republicans on tax cuts. (...)

The White House deal with Congress will renew the Bush tax cuts for rich and poor alike for two years, as well as adding a further a 2pc cut in payroll taxes and an extension of unemployment aid.

For the past several months, we've been told by various Serious People that European governments were being punished by markets for being too lavish on social spending, despite bond rates being at record lows (other than in peripheral countries subject to more specific attacks) - or would be punished if they didn't "reform" and lower taxes. The same has been promoted in the US, via the Catfood Commission and the whole noise machine against deficits and stimulus packages... Well, the US government did just what the Serious People wanted, with a nice fat tax cut for the rich, and bond rates jumped - ie markets actually literally hated the measures, selling off US bonds violently.

In other words, bond vigilantes are telling us that they don't want tax cuts for the rich. Just sayin.