Why So Much Selling in Bonds?

Why So Much Selling in Bonds?

Without a doubt, it's been a frustrating and puzzling week for the bond market.  Everyone knows that bonds have moved consistently higher in yield, but there is very little understanding and agreement about WHY that move has taken place.  Europe had a rough week, but EU bonds didn't lose as much ground as US bonds, so we can't really stop there.  We also know that econ data wasn't to blame (or if it was, traders bought bonds at first and then changed their minds later in the day--not typical behavior, to say the least).  Beyond those considerations, we're left with guesses and possibilities that are much harder to substantiate and much more esoteric.  These include things like year-end positioning constraints, a move to the sidelines before the Fed announcement, and curve trading driven by one of several factors.