Bonds Face Worst July In 10 Years

As liquidity-slurpers the world over wait for the written words from the FOMC this afternoon, it seems the bond market has sold-first-asked-questions-later on its 'Taper' expectations (with 30Y yields now at 23-month highs). It is little surprise (given the real reasons for a Taper as we discussed here and here) but today's ADP and GDP data provide more 'headline' ammo for the Fed to cover the reality that they are cornered.

It seems it is better to project the 'fallacy' that the economy is strong enough to withstand a 'tapering' of monetary policy than to admit that there is a technical limit to the extent by which the Fed can print money before it breaks the market and shifts sentiment to a realization that it's nothing but monetization.  

The US bond market has suffered losses for 3 months in a row now, and this is the first July loss in 10 years - or will the FOMC save them?

 

Total return for aggregate bond index (greater than 1Y maturity)...

 

Source: Bloomberg