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So that is what happens when you try to take on the bond market. On Wednesday the US authorities must have been looking on in horror as long-term bond yields spiked. Markets were already wobbling last week. Now it looks like someone is hitting the panic button. Yields on 10-year Treasuries, for example, jumped more than 20 basis points in an hour and now stand at 3.7 per cent. Earlier this month, yields were 3.1 per cent.

The risk of rattling the bond market was always there. A government cannot go around dropping the odd trillion dollars and expect no one to notice. Equally, the ballooning of the Federal Reserve’s balance sheet has worried many, while the start of quantitative easing was an open invitation for investors to test the Fed’s hand. So far it is proving limp. This week, for example, the Treasury has issued another $100bn-worth of bonds. The Fed, meanwhile, has purchased less than a 10th of that.

Of the three things spooking investors, one is real, while the others are overplayed. That yields on 30-year Fannie Mae mortgage bonds leapt about 45 basis points on Wednesday to 4.7 per cent is a genuine problem. If Americans cannot be coaxed into taking out mortgages or if refinancing cash vanishes from consumers’ pockets, forget about green shoots. Mortgage applications fell 14 per cent last week versus the week before, according to the Mortgage Bankers Association.

That the yield curve has steepened so dramatically highlights the two other fears, namely that the Fed may lose control of prices in future and that America’s bulletproof credit rating may be under threat. Here investors should heed Japan’s experience and relax a little. The downgrading of its sovereign debt in 2001 did not prevent authorities from keeping interest rates low nor did loose monetary policy and rising government debt lead to inflation.

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