If you look at the treasury auctions very closely you'll notice that over the last 9 months the buyers of the bonds have been (unreported and obscured) the federal reserve. Which means that the bond auctions are a direct monetization scheme.
This is keeping bond yields low (and below inflation anyway).
When it comes to light or has to stop, or the remaining foreign buyers all quit (Because yields are low and the market says they should be higher) then yields will have to rise.
When this happens previous bonds that have low yields will have their values drop....
Comments
If you look at the treasury auctions very closely you'll notice that over the last 9 months the buyers of the bonds have been (unreported and obscured) the federal reserve. Which means that the bond auctions are a direct monetization scheme.
This is keeping bond yields low (and below inflation anyway).
When it comes to light or has to stop, or the remaining foreign buyers all quit (Because yields are low and the market says they should be higher) then yields will have to rise.
When this happens previous bonds that have low yields will have their values drop....