2013 bond market forecast
There is little doubt that the Fed's articulated and executed policies have resulted in a bond-bubble with both short and long-term consequences for investors and the economy.
At some point the bond-bubble will burst. But there is no certainty on when that will happen or what ultimately will cause rates to rise.
What investors need to understand is that while yields and bond prices in 2013 could remain flat relative to closing third quarter 2012 measures, yields are unlikely to fall further and prices are unlikely to rally in 2013, with the possible exception of short-term U.S. treasuries.
However, there is the possibility of what I'm calling a "skyfall."
For fixed-income investors this means there is a chance the bond bubble may finally burst.