Sticking with the theme we've discussed the past two days, rates continue to rise on optimism about the economic recovery.  And that's being fueled by optimism about the pandemic outlook (with the expectation of widespread global vaccine mandates, following the FDA's approval of Pfizer's vaccine).

So, U.S. 10 year yields are now 10 basis points higher than prior to the FDA announcement on Tuesday.  And as we discussed on Tuesday, we should expect the world to follow the lead of the FDA, with regulator approvals and subsequent widespread vaccine mandates.  With that, yields globally are on the move. 

Today, German yields had the biggest one day move since March.  Italian yields (one of the weak spots in Europe) jumped by nine basis points, the biggest move since late February.  What's in common now, with that late February – early March period?  Congress was about to put a stamp of approval on the $1.9 trillion Biden spending package.  Today, they are about to put a stamp of approval on another $4.5 trillion in government spending.  

In anticipation of the $1.9 trillion, the U.S. ten year yield rose from 1% to 1.75% in forty days, earlier this year.  The difference then:  The Fed was not only concerned about rising rates, there were reports that they might consider taking additional action to force down longer-term market interest rates (through another iteration of "operation twist"). 

This time around, the Fed is actually talking UP rates.