The global bond market has been frightened and the sharp decline in interest rates is not over yet

The Fed left interest rates unchanged after its Wednesday meeting, but issued new forecasts indicating that there would be no further interest rate hikes this year, down from an earlier forecast for two others. He also announced that he would end his September turnaround program.

"There is no doubt that the Fed has taken people by surprise by making more swings last week for it to look more dovishly than ourselves, or other people with the expected dovish vision" said Julian Emanuel, head of BTIG's equity and derivatives strategy.

Bond professionals said some of the week's market moves were disconcerting, and many blamed them for late-quarter portfolio maneuvers and for other technical factors, such as buying by convexity or the cover.

Convexity buying can happen when homeowners refinance their mortgage, eliminating the securities that fund managers expected to keep for several more years. The fund manager can in turn turn to the Treasury market to make up for the "duration" of this portfolio. According to the strategist, the purchases related to the convexity weighed on the yield of the Treasury at 10 years during the last sessions.

"{The Fed]It's the catalyst that opened the window … It's more what the Fed knows and what worries it. They shot a 180, and they shot another 90 degrees on easing last week. What they know they do not tell us, "said Andrew Brenner of National Alliance." What you have here is a fear that something is happening in Europe. Even Draghi this morning said that he was very worried. "

The President of the European Central Bank, Mario Draghi, spoke before the opening of the US market on Wednesday. Yields dropped to their lowest point of the day when he suggested relieving the banks in case of negative rates, said Peter Boockvar, chief investment strategist at Bleakley. Consulting group.

"That means that if it makes any adjustments, it will be able to handle negative rates for longer.I think that's why you have a lowered leg on European bond yields, which are lowering our returns , "said Boockvar.

Analysts said yields could fall further, but a series of positive economic data or a substantial trade deal with China could help turn the tide.

Although yields may remain under pressure, the worst move may soon come to an end. Strategists said some of the technical factors should fade as the end of the quarter pbades.

Although Treasury yields reached a new trough in the intraday, the fact that the market had sales was encouraging, as yields returned to the ground. The strategists also pointed to a five-year low auction on Wednesday afternoon, after Tuesday's strong demand for 2-year notes.

"It's encouraging to see that we may find a pied-à-terre, but it's too early to know," said Mark Cabana, Head of US Short-Term Strategy at Bank of America Merrill Lynch.

Although some bond movements can be explained, the unresolved question is what has changed to impose a mbadive repositioning of bond holdings.

"I think it's a bit of a concern, the questions we asked ourselves were what changed last week, what has changed is the Fed's reaction function, or its outlook." It's a lot more dovish than we thought, their prospects are a little less optimistic than we thought, "Cabana said. He pointed to the German negative, but said the outlook is slightly worse than in the past.