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By Jay R. Feuerstein, founder & CEO of Gnomon Alpha LLC.

In the mid-1980s, noted economist Edward Yardeni coined the name "Bond Vigilantes" for aggressive bond market sellers who drove interest rates higher whenever they determined government spending was irresponsible. In fact, they were among the factors blamed for the "Bond Crisis" of 1994, when U.S. bond markets lost a trillion dollars in value.

Inflationary expectations, deteriorating credit quality, and surprise Fed hawkishness created a market environment ripe for a crisis. Could that be the situation today? Is that why, despite deteriorating housing and labour markets and a dovish Fed, two-year Treasury yields just traded above 4 percent, and 30-year Treasury yields went above 5 percent?

Certainly, inflationary expectations have increased due to the surge in oil prices caused by the Iran conflict. Despite an alleged ceasefire, fighting rages on in the Middle East, and the Strait of Hormuz remains barricaded. Oil is central to all economic production, so its increase cannot help but increase the overall costs in an economy.

While the official story surrounding oil is that its price increase is only temporary, that is not what key members of the Fed all believe. Last month's Fed decision to keep rates steady was met with four dissenters on the Fed Open Market Committee (FOMC). Such dissent has never happened before. One was the Super Dove, Stephen Miran, who voted for a rate decrease. B......................

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