“Is it an earthquake or simply a shock?” asked Cole Porter in lyrics made famous by Frank Sinatra. That’s what policy analysts are asking about the sudden increase in the interest rates investors in U.S. government bonds are demanding, an increase only partly reversed at week’s end. One would have thought that news that President Obama and congressional Republicans had agreed on a deal on taxes would be soothing music to the ears of nervous investors. One would have been wrong. There is just too much Greek balalaika and Irish bagpipe music filling their ears for them to be soothed by the sweet sound of self-congratulation emanating from the White House and Capitol Hill.

Especially when the president and the Republicans are congratulating themselves on a compromise that increases the budget deficit now to perhaps a record $1.5 trillion in the 2011 fiscal year, estimates Lou Crandall, economist at Wrightson Icap, without cutting it at some later point. Congressional approval is likely but with at least one modification to appease House Democrats who are crying sell-out because the president reneged on his signature campaign pledge to end tax cuts for the rich. They seem likely to get the inheritance tax, which has been zero under the Bush cuts, and is set in the compromise at 35 percent on legacies in excess of $5 million, changed to 45 percent on estates in excess of $3.5 million.