Fear Has Been Trampled By Panic

As this chart of 10-yr Treasury yields and the year over year change in Core CPI suggests, the Treasury market is zigging when it should be zagging. Yields have plunged on fears of a double-dip recession, which in turn are being driven by fears of a financial market meltdown in Europe. The fears embodied in today's 2.0% 10-yr Treasury yields eclipse even those that prevailed at the end of 2008 when markets were convinced that The End of the World As We Know It was just around the corner.