A turning point in the bond market?

Fixed income bonds may be about to become cheaper as yields blindly follow US trading patterns.

The recent volatility in financial markets closing out the 2013 financial year was largely precipitated by US Federal Reserve ( “Fed”) Chairman, Ben Bernanke announcing after the policy meeting on 19 June that the Fed could taper its $US85 billion a month bond/mortgage paper buying program later in 2013 and end purchases mid-2014. The Fed’s news that “quantitative easing” (QE) may be coming to an end caused a significant sell-off in the US treasury markets.

In other words we had falling bond prices and rising bond yields .

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