Commentary On Nov. 3, the Federal Open Market Committee indicated the economy had met the committee’s targets to begin reducing the pace of its U.S. Treasury and mortgage-backed security purchases by $15 billion per month. While history has shown that Treasury yields fall while the Fed is engaged in a balance sheet taper, the market initially reacted by sending Treasury yields higher. Despite conclusive data following quantitative easings 1, 2, and 3 where Treasury yields fell during a taper or termination of the program, investors believe this time is different. The overarching belief today is that yields would be significantly higher had the Fed not intervened with quantitative easing. The reason investors believe yields would be higher had the Fed not intervened and that yields are headed higher is due to the lack of demand or desire to own Treasury securities. There’s little evidence to support that view. Due to …