Warren Buffett's Berkshire Hathaway Inc. sold $1.5 billion of mostly fixed-rate debt to retire floating-rate notes at a time when government bond yields are rising and the U.S. is showing signs of economic improvement.

A unit of Buffett's Omaha, Nebraska-based holding company issued $750 million of 4.25 percent, 10-year notes yesterday priced to yield 95 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. It also sold $375 million of 3-year, 1.5 percent notes and the same amount of floating-rate debt yielding 33 basis points more than the 3-month London interbank offered rate, the data show.

"The market scrutinizes Buffett's moves very closely and this would indicate he's thinking interest rates in the longer term may go up," Vijay Chander, Hong Kong-based head of credit strategy at Standard Chartered Plc, said in a phone interview. "That's consistent with our house view that the U.S. economy is improving."

David Fuller's view This is not timed as sweetly as some other bond offerings reported by Fullermoney around October. However I am sure Warren Buffett is much more concerned about the next 10 years.

Since he has been openly and repeatedly bullish of America over the last two years, and backed it with his "all-in wager" on the US economy when purchasing Burlington Northern Santa Fe railroad in November 2009, he can only be anticipating higher interest rates.

I would not bet against him being right.

Looking at the US 10-year Bond Yield, (historic, weekly & daily), we can see that a consolidation of the strong early-October to mid-December gains is underway. If over half of these gains are held during this phase, as I suspect, then the next upward leg to at least test 4% could commence sooner than most people expect.

At this stage of the recovery cycle rising 10-year Treasuries yields are a tailwind for the stock market. However at some point, probably above 5%, this would begin to turn into a headwind as people extrapolate the trend in their forecasts. Other variable factors will also be an influence, not least the Fed's monetary policy at the time.