Bond Massacre Hits Treasuries, TIPs, Munis, Mortgages; PIMCO Among Biggest Losers; Is the Bond Bull Finally Over?

The treasury market has slapped Bernanke silly. Yields have soared ever since QE II was finalized in November. Mortgage rates are up a half-percent in a month and Bankrate shows they are about at the same level as a year ago. Treasuries, TIPS, and municipal bond funds have all been hit hard in the past few weeks. Matters took a turn for the worse when President Obama agreed to a tax compromise that will cost close to $900 billion.

As we have argued for a while, the Fed and Treasury bailouts of the various categories of bonds (both Treasuries and mortgage-backed) are more an opportunity for large creditors (such as China, and bond funds like PIMCO) to dump their holdings, than a permanent move to "repair" these markets. That of course, is because they are beyond repair.