It's no mystery at all. Funds aren't allowed to invest in anything they want, but typically have investment mandates. Somewhere in the region of $3 trillion (

It's no mystery at all. Funds aren't allowed to invest in anything they want, but typically have investment mandates. Somewhere in the region of $3 trillion (my estimate) is in pension funds/endowments in the US that have a 7-8% nominal return target for their managers. Bonds price off the Fed funds rate, with longer dated bonds being based on predictions of where these rates will go plus an inflation component. If the 10 year US bond is giving you 2.4% yield to maturity and you are, say, head of CalPERS who runs $268bn and needs to hit 7.75% nominal return, what will you invest in to keep your job? It isn't all one way though, at the start of this year I predicted bond strength followed by equity weakness before we move much higher on stocks: http://www.businessinsider.com/the-contrarian-bearish-2014-forecast-2014-1 http://www.businessinsider.com/the-contrarian-bearish-2014-f... You just need to think through how you would act if you're one of these huge funds, your moves are constrained.