It is remarkable how the treasury market reversed the impact of Bernanke's original hawkish comments made back in May. A very similar daily move took place in the "belly" of the curve on Thursday with yields moving the other direction.
In spite of Bernanke's apparent "reversal" with respect to the securities purchase program, the bond market will not return to the frothy levels seen early this spring. There has been too much pain across the fixed income universe. Consider that over the past 6 years (possibly longer), the largest 3-month downside price move in long-term treasuries occurred in the period from the close of 4/5/2013 to the close of 7/5/2013. It was nearly a 12% drop on a total return basis, including interest. In fact 5 out of 20 worst 3-month periods for long-term treasuries have been this year. This is something investors don't easily forget.
Even if the U.S. economy stumbles in the near term, portfolio managers will maintain a much more moderate duration exposure vs. early this year or the last. The sudden realization that rate products are not riskless and reaching for yield could be quite costly, and will be with us for some time.