Treasury Yields Surge Most Since 2003 as Fed Previews Tapering – Bloomberg 06-21-13

Salient to Investors:

Dan Heckman at US Bank Wealth Mgmt said Bernanke surprised the markets, which now have a real expectation of curtailment at some point, and unless growth turns very negative and inflation moves much lower, the Fed will not back away from the tapering viewpoint.

Ian Lyngen at CRT Capital said the 2.5 percent level on the 10-year note yield is psychologically significant, and 2.52 percent is technically significant – if we are hold there we should consolidate in this new yield range of 2.3 percent to 2.5 percent, but if we break the range, we could rise as high as 2.75 percent. the 61.8 percent Fibonacci retracement level from the July 1 2011 high”

Thomas Roth at Mitsubishi UFJ Securities USA said the market is adjusting to the new reality as people have been hiding in bond funds, which have been piggy-backing off the Fed. Roth said the adjustment process may take us a little further than you would think.

44 percent of economists expect the Fed to cut its monthly bond purchases to $65 billion at its Sept. 17-18 policy meeting.

Fed-funds futures showed a 54 percent probability the Fed will raise the benchmark rate at its December 2014 meeting.

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