The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year

[lapfog_1]

20. Actually the bond markets control the yields on bonds.

Two things happened to roil the bond markets.

1. The tax cut has caused the treasury to float more bonds to cover expenses

and

2. China has moved from a buyer of US bonds to a more neutral..

So the Treasury had to increase the yield to move the paper.
That caused the entire bond market ( to include corporate bonds ) to match the rate.

The result is that corporate profit futures are now less promising as those companies have to pay the increase rate on their bonds they sell.

The stock market is ( usually ) about future performance. The increased profits due to the lower tax rate in the US was already priced into the market. Now the reality of increased deficit spending by the government is being reflected in the stock market.

Again, this is me saying this, this is exactly as Ali Velshi spelled it out much earlier this week. I think he is the best business analyst on TeeVee right now since Mark Haines (sp?) died.