The upside pressure is on the tmv now. -Treasury rate 10 year 2.87%, inflation rate 3.57%. It is already negative return this year for treasury buyers comparing to the inflation rate. -Treasury buying program ended next week. No more buying pressure. -Fed rate is 0.25%. cannot be lower. a lesson from Japan. Treasury never go to negative. -US Economy growth. <- this is what I believe.
Downside -Greek default -US negative growth, but by looking at today GDP number. We are on soft patch, slow down is temp. Economy will be accelerated during the 2nd half of the year like what the fed said.
I think that as soon as the first auction is held, in which there is not neaningful participation by the fed, the panic will begin and after a 200 to 300 basis point raise in the long bond yield, here comes QE 3, with a vengence.