That’s what the bond market is asking the Fed right now as it tests this downtrend line:

sc-2The Fed hasn’t even begun to taper and the 10-year treasury rate has nearly doubled over the past 18 months. What the equity market may be starting to worry about over the past few days is if $85 billion per month in bond buying can’t keep rates down then the Fed may have a real problem on its hands.

Over the past few years “quantitative easing” has done a great job of suppressing bond rates and thus stimulating the economy with cheap money. However, the bond market is now showing signs of revolt. Should the Fed lose control of long rates the economy could suffer the effects of money getting more expensive, the inverse of QE’s effect over the past few years.

Convincingly breaking above this downtrend would be both a major blow to the Fed’s confidence game and a signal that it is, in fact, losing control of the long end of the bond market.