Italian bond, Japan & the U. S.

In the news is the 10-year Italian government bond yield touching 6.0%. Here is a link to a site with a chart (link).

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From 1993 until 2011 Italy's Government Bond Yield for 10 Year Notes averaged 5.94 percent reaching an historical high of 13.75 percent in March of 1995 and a record low of 3.22 percent in September of 2005.
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I believe that the recent massive interventions in the market have kept certain yields artificially low. In the U. S. it was QE1 and QE2, in Japan it has been going on for over 20 years.

For the Japanese perspective here is that link2.

Here is the same site's entry for the U. S. (link3).
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The United States' Government Bond Yield for 10 Year Notes declined 9 basis points during the last 12 months. From 1971 until 2011 The United States' Government Bond Yield for 10 Year Notes averaged 7.17 percent reaching an historical high of 15.84 percent in September of 1981 and a record low of 2.05 percent in December of 2008.
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A big question for American investors is whether the U. S. bond market will go more the way of Italy or Japan. Again, the Japanese central bank has been doing similar policies for far longer than the U. S. Fed, and their government debt situation and demographic rooted problems even more intractable.

If the U.S. ten year moves in a short time period to an historically average 7.0 yield from the current under 3% yield, it will be a bloodbath for current bond holders, and likely almost as bad in the U. S. stock investors. Some may see this as alarmist, but Italian bonds went from 4.0% to their historical average of 6.0% in less than a year. So I wouldn't even classify that kind of move as a Black Swan event, it would be normal and expected market action during a bear market for bonds. What we have now in the U.S., historically low yields, that some believe is in large part due to massive government distortion of markets, is more of an exceptional kind of event.

This may seem an odd topic for a trading blog on a day when the Dow is making a big move down, but it is what is on my mind. For now I am planning to sit tight and see were the dust settles before making any moves. Fast markets are not my friend. Often the best move for me is to do nothing. Fast market days tend to be better for day traders vs. me, the relatively slow moving position trader.