The Federal Reserve's most recent monetary stimulus has negatively impacted Treasury bonds. As part of its QE3, the Fed is looking to buy $40 billion in mortgage-backed securities every month in an attempt to maintain low interests until 2015. But investors selling off treasuries is generating the opposite effect in terms of the Fed's goal of lowering interest rates. Investors are now allocating more money toward stocks, corporate bonds and commodities.
With these developments in the bond market, it is expected for inflation to rise over the long-term. The 10-year yield of Treasury bonds is expected to hit two percent according to the investment banking bulge bracket Goldman Sachs. 2013 will also see the Treasury bond market take further hits.
