Every rise in long-term yields now triggers the same reflex: the bond market is punishing fiscal profligacy. The story is tidy, morally satisfying — and only partly supported by the evidence.

Yields decompose, roughly, into expectations for short-term rates and a term premium: the extra compensation investors demand for holding long bonds. Deficits operate mostly through the second channel, and the second channel is the one economists measure worst.

Three Tests of the Fiscal Story