So much for having any optimism on the budget front after a bipartisan majority voted for a sweeping plan that would cut the deficit to 3% of GDP by 2015 and balance the federal government's books by 2025. Democrats and Republicans are gearing up to vote early next week on a nearly $1 trillion tax cut package. What's worse is that not a dime of it is paid for, so the entire cost (initially estimated by the Congressional Budget Office to be more than $850 billion over 10 years).

Given these developments it is not hard to understand why treasury bond rates are surging, despite the Fed's massive $600 billion asset purchase plan. Even with the drop in bond prices, U.S. government debt continues to be the most overvalued asset class out there (maybe with the exception of cloud computing stocks). Selecting solid corporate bonds and holding them until maturity appears to be the far better investment today, even after the strong performance we have seen from them over the last couple of years. Bond buyers better tread carefully.