Yardeni: Rising Yields Threaten Economy

Economist Edward Yardeni says the rise in bond yields and mortgage rates threatens to stall any economic rebound.

The founder of Yardeni Investments coined the term 'bond vigilantes' in 1983 to describe bond investors who dump their holdings when huge budget deficits threaten to spark inflation.

The bond market is full of concern that the government's huge budget deficit "eventually might lead to higher inflation," he points out.

Others agree. Economist James Bianco tells The Wall Street Journal, that the market figures the $1 trillion-plus deficit can't be financed without Fed assistance.

But that assistance has sparked the inflation worry, he says. "We're caught in a vicious cycle."