The recent surge in long-term US Treasury yields will certainly have raised a few eyebrows. However, if the Fed’s forthcoming approach to unwinding unconventional monetary policy stimulus bears any resemblance to its strategy in the wake of the Treasury-Federal Reserve Accord of 1951, there is no reason to expect a "bloodbath" in the US government bond market. Although we forecast the 10-year yield to creep up to 3.5% by the end of 2015, this would still be low by past standards.
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