One Of Our Worst Fears About Rising Interest Rates Is Already Coming True
Mar. 22, 2012
The story of the last few weeks has been the rise in interest rates in the US and Germany.
This is a sign of improving sentiment. It means that the voracious bid for save-haven assets is starting to dissipate.
But we’ve worried that people would spin this is as bad news, that bond vigilantes are coming, or that interest rates are surging because the Fed has fallen behind the curve.
And then from there we worry that if people start freaking out, we’ll get policy errors, like premature tightening.
And that seems to be happening in a weird way.
The NYT has an article titled: German Bond Prices Decline, Unsettling Confidence in a Safe Haven.
The insinuation is that: rates are rising, maybe people aren’t so confident about Germany!