Could this be the turn in the bond market? The relief rally following the promised $700 billion (about Rs32 trillion) clean-up of Wall Street’s toxic waste lasted barely more than a trading day. Foreign investors may finally be cottoning on that they are bailing out Uncle Sam. With bonds and shares falling—and oil shooting up—this could get nasty.

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For most of this month, US treasury bond prices rose on the theory that, in the midst of a crisis, they were a safe haven. But, as Hank Paulson and Ben Bernanke have approved a bewildering array of ever more far-reaching bailouts, investors started adding up the numbers. Depending how you account for the quasi-nationalizations of Fannie Mae and Freddie Mac, the total cost is now well over $1 trillion—and possible several trillion dollars.

If Uncle Sam was rich, this might not matter too much. But the government’s deficit is already yawning as the result of a slowing economy. On conservative estimates, it will reach $450 billion next year. It doesn’t take a dire assumption to think it could top $1 trillion by 2010. What’s more, the country as a whole is still relying on funds from abroad to finance its trade gap. The current account deficit is running at $60 billion a month, a cool $720 billion annually.

From an international investor’s perspective, this is beginning to look worrying. Last week they were receiving a yield of only 3.4% for holding US government paper for 10 years. Even if inflation comes back under control and hovers around 3%, that doesn’t look like much compensation.

Something more like 5-6% would be reasonable. If inflation starts to take off—and Monday’s astonishing 12% spike in oil prices is not a comforting omen—a reasonable bond yield would be still higher.

In the past week, the dollar has fallen by 3% on a trade-weighted index while the price of 10-year treasuries have dropped 4%. Put these together and foreign buyers of have suffered a 7% loss. The real worry is that there could be a stampede for the exits as they try to cash out before suffering even bigger losses. The Federal Reserve might then be forced into the unpleasant task of pushing up interest rates in the midst of a crisis.