Are Bonds (Fixed Income) at a Tipping Point?

The heuristic is: Don’t fight the Fed.

On November 3, 2010 Federal Reserve Chairman Ben Bernanke made it official that the Fed would increase the money supply by $600 billion and buy Treasuries in an attempt to (his objectives):

1, Lower interest rates to help with home purchases, business loans, etc.
2. Lower the dollar to help exports by making U.S. exports cheaper
3. Increase commodity and equity prices giving a nudge to inflation

To date:
1. The ten year Treasury has moved up to 3.53 percent vs. 2.62 on November 3, (principal amount is down)
2. The dollar has been trending higher rather than lower
3. Commodity and stock prices are up (S&P500 up about 4%, gold is about the same price)

Not exactly what Chairman Bernanke had in mind, but it is early in this spending cycle. The data is certainly conflicting and with bonds selling off, we have to ask the question, Why?

1. Is it because people are beginning to fear coming inflation,
2. Is it because new money is driving up GDP and there is a growth scare (out of bonds and into stocks)
3. Is it end-of-year profit taking (bond prices peaked in October)?

I suspect we will see some clarification soon. What do you think?