The 20+ year bull market in bonds came with tumbling interest rates.
And for years, economists, strategists, and various pundits incorrectly predicted that interest rates had “nowhere to go but up.”
But rates began to rally in May, which was when Federal Reserve Chairman Ben Bernanke hinted that the Fed could soon begin to taper its large-scale asset purchase program (LSAP). Also known as quantitative easing, the LSAP consisted of the monthly purchases of $US85 billion worth of Treasury and mortgage securities. Tapering is considered the first step on the long path of unwinding the Fed’s ultra-easy monetary policy, a process that would mean higher, more normal interest rates.
Earlier this month, Business Insider asked Wall Street’s top experts for what they considered to be the most important chart of the year.
“Proves two things: (i) that the secular bull market in bonds has ended and (ii) the Fed may be able to influence yields out the curve, but can’t totally control them,” said Rosenberg.
“Rates have only one way to go: higher,” declared LaVorgna.
So, will 2014 confirm that rates indeed had nowhere to go but up?
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