Regarding the vote in the US Senate on the Administration’s plan to extend the Bush tax cuts for two years. US debt markets have reacted with vehemence to the new proposal. For the first time in years we see evidence of our heretofore absent friends, the bond vigilantes. Interest rates on Treasuries (10 year Treasury now yielding 3.3% versus 2.4% in the middle of October) are on the rise. This may be a reaction to growing inflationary expectations or it may be a reflex reaction to the feared fate of the US dollar. In either case this debt market reaction is problematical for the US economy.