The last few days have seen significant shifts in the term structure of US Treasury bonds; auctions have not gone well and despite the world's expectations for 'taper' to lead to a surge in rates, the long-end of the bond-market has rallied. While Goldman might believe the 'bond bubble' is starting to pop, the following 223 years of Treasury yields (through free-markets and centrally-planned) sheds some light on what the 'new normal' level of rates really represents because, as we noted previously [5], the world is so levered now that any 'reversion' in rates is simply unthinkable.
[6]
Notice any difference pre- and post-Fed?
Chart: Goldman Sachs