So we are all looking for a Federal Reserve tapering announcement in early November likely stating the intention to reduce their purchases of treasury securities and mortgage backed securities starting in December (likely) by $15 billion.
EVERYBODY knows this is the plan–unless you have been under a rock for the last 3 months.
So what is happening in the bond market? Values are moving higher with yields moving lower–at this moment the 10 year treasury stands at 1.51% which is 10-11 basis points below where it was 3-4 days ago. Trying to figure out the details of these movements is simply not possible–the trend for the next 6 months might be ‘guessable’, but forecasting (guessing) is just not possible, but the talking heads on the tube spend hours and hours blabbing about it–hey they have to since they have so much air time to fill.
Over time rates will move higher, but right now the amount of investable cash laying around is massive–still the $5 trillion in money market accounts–would be surprised to see rates spike too much until folks either spend or invest this ‘dry powder’.