"It's just a nice, elegant way of saying the markets matter again," Whalen said in an interview Tuesday. "The bond market's been in an induced coma. The central banks forced yields down and kind of put their foot on everybody's neck."
"Now what you've seen is that because of Trump, and because of his stated fiscal agenda, suddenly the market has said, 'Wait a minute,' and we've seen rates back up considerably, and I think they're going to continue to do so."
Fiscal stimulus has been in short supply since President Barack Obama's $787 billion stimulus in 2009. Bond yields have stayed in check through most of his term.
Indeed, the Federal Reserve has kept its short-term rate target anchored for the past eight years, raising just once — a quarter-point increase in December 2015 — and perhaps once more next month. The Fed had been an aggressive buyer in the Treasury market, ballooning its balance sheet to $4.5 trillion in three rounds of quantitative easing.
In the meantime, investors continue to fret over a bond bull market that has been ongoing for more than three decades. Each predicted end of the fixed income rally has been wrong. But Trump's plans for aggressive fiscal policy, the likes of which hasn't been since before the Great Recession, have renewed fears.
"When you have inflation and growth, or the prospect for more growth, that slams smack into a bond bubble, it's a very dangerous cocktail," said Michael Pento, head of Pento Portfolio Strategies.
Pento worries that the combination of market factors could stop the president-elect before he gets started.
"There's a lot of bad stuff that's already occurred," he said. "If you put them on a ledger, on the good side there's hoped-for growth policies in 2017. On the bad side, you already have a spiking dollar, spiking interest rates. The chances are elevated that Trump starts his presidency off with a recession."