What’s main catalyst for US Treasury selloff? A bit of everything?

With the US Treasury market selling off sharply again where the 10 yr note yield is at the highest level since mid August, it begs the question of what the main catalyst is. Is it the growth belief, inflation worries and/or concerns with deteriorating US government finances? The markets are saying a little bit of all. Earnings last week from RIMM, ORCL and NKE gave a sentiment lift to the economic outlook as has some of the recent economic data. Today, inflation expectations implied in the 5 yr and 10 yr TIPS are breaking out to the highest level since early August 2008. The US 5 yr CDS is rising another 2 bps to 39 bps, up 7 bps in the past two weeks and is at the highest level since mid July.

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