Wall St bond gurus may be wrong about QE unwind

New York

ON Wall Street, the conventional wisdom is that once the Federal Reserve finally starts to whittle down its crisis-era debt investments, US Treasury yields will have nowhere to go but up. But to some bond investors, history suggests that the consensus couldn't be more wrong.

During each of the Fed's quantitative easing cycles, yields rose when the central bank was buying and fell after it stopped. That ran counter to what many expected based on simple supply and demand as the Fed amassed US$4.5 trillion of debt and became the single biggest holder of Treasuries.