Treasury Bond Yields Making New 1-Year Lows in Line with Slowing Fed Asset Purchases

Barely a week after 2Q GDP and a slue of revisions indicated that the economy has performed better initially indicated in the first half of 2014, bond yields are again making new 1-year lows. Thus the initial bond selloff following the better than expected GDP stats has been completely reversed and the downtrend in yields has been reasserted (charts 1 & 2). This also means our model of how bonds are likely to react given slowing Fed asset purchases remains intact (charts 3 & 4).