This Bond Market Sell-off Looks a Lot Like ‘Taper Tantrum,’ the Sequel

We’ve seen this movie before.

JPMorgan Chase & Co. analysts led by Jay Barry point out that the latest sell-offs in government bonds and the rising yields they've produced resemble the 'taper tantrum' that engulfed markets back in 2013 as investors fretted about the potential for the Federal Reserve to reduce the pace of its asset purchases.

Yields on sovereign debt have jumped in recent days thanks in part to concerns over the ability or willingness of the European Central Bank and the Bank of Japan to continue their unconventional monetary policies, JPMorgan argues. But if those concerns were the spark that lit the fire, investors' collective positioning was the gasoline that fanned the subsequent flames.

"At least a portion of the recent rise in Treasury yields has been driven by shifting perceptions of monetary policy at other developed market central banks," the JPMorgan analysts said. "Coupled with still-long position technicals and rich valuations, the setup is somewhat similar to the preconditions before the taper tantrum in 2013 and the euro tantrum in 2015."