Damage control, feral hogs, and the QE vigilantes

It's just been a few days since Bernanke told us that QE is on the chopping block if the economic data play out like the Fed expects. Market reaction, however, has been less than kind.

So we're seeing some damage control today by a couple of more hawkish Fed members - non-voting FOMC members but nonetheless influential Fed members.

First, Minneapolis Fed head Kocherlakota felt compelled to issued a statement saying it may be appropriate to keep the fed funds rate at an extraordinarily low level at least until the unemployment rate falls below 5.5%. Recall that Bernanke's threshold is 6.5%.

Then we have the always colorful Dallas Fed President Richard Fisher who told the Financial Times, "...big money does organize itself somewhat like feral hogs. If they detect a weakness or a bad scent, they’ll go after it.”

Though he has never been a fan of QE, he repeated he doesn't want to go from" wild turkey to cold turkey overnight."

This brings us to a new group of bond traders on the Street - the QE vigilantes.

Most of have heard of the bond vigilantes.Wikipedia offers a good definition - When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk. That in turn helps keep inflation and government spending in check.

In recent years, the vigilantes have been dormant against the backdrop of trillion dollar deficits. A lack of near-term inflation anxieties are playing a role.

Those inflation bond vigilantes may now be morphing into the "QE vigilantes," as they launch waves of bear raids on the market, hoping to slow growth and force the Fed to keep the liquidity hose aimed at the bond market.

Fisher is standing in the gap.