On Thursday, 8/15/2013, the 10-year yield broke through the psychological barrier of 2.75%. Since May, the intermediate-term 10-year Treasury has catapulted from a year-to-date low near 1.6% to a year-to-date high of 2.8%.

Clearly, the U.S. Federal Reserve is having trouble persuading investors that — absent its $85-billion-per-month bond binge — they have the tools to suppress longer-term interest rates.

Perhaps ironically, if the Fed announces any tapering of its quantitative easing (QE) program in September, many project that it will be a modest move from $85 billion to $75 billion.

Think about that for a moment. Bernanke’s central bank may or may not slow the purchasing of U.S. treasuries as well as mortgage-backed securities. What’s more, should they do so, it will be an exceptionally modest reduction.

Yet the 10-year yield has rocketed 75% higher (120 basis points) from 1.6% to 2.8% — in advance of the Fed and in spite of them.

The media have dubbed the speculative exodus from bonds “front-running” the Federal Reserve. Specifically, investors do not wait around for what they perceive as a foregone conclusion; better to get out before the central bank of the United States exits QE and before the demand for U.S. Treasury bonds dissipates.