Friends

The bond vigilantes are at it again. Concerns about widening fiscal deficits are sending yields higher along the yield curve with the 10-year Treasury note yield rising to 4.58% during today’s trading session. It’s not that 4.58% is that extravagant a yield but more the direction of rates that have market participants on edge. We have seen this pattern lately. Yields go above 4.5% and stocks sell off. Yields move below 4.5% and stocks rally. Again, the bond market is an expert at getting investors’ attention.

As for stocks, by the close the Dow Jones Industrial Average was down 816 points to finish the day at 41,860. The S&P 500 was down 95 points to close at 5,844. The Nasdaq Composite Index was down 270 points to close at 18,872. Gold was up $37 to trade at $3,322 per ounce, while oil was down $.45 to trade at $61.58 per barrel WTI.

We have felt for some time now that the main thing that can disrupt prosperity is the mountain of debt that the U.S. has accumulated over the years. The interest burden alone can take your breath away. The markets don’t always focus on it, but when they do it is usually bad for both stocks and bonds. Today market participants were focused on it.

Have a nice evening everyone.