If not back to bonds:
The Twist/QE3 stimulus aimed right at mortgage and housing was the greatest stimulus of all time by an order of magnitude. And we lost it ALL in a period as quickly as we lost the “Homebuyer Tax Credit”. As such, I don’t see why we should expect something different as an outcome. This, I see similar pressure on house sales volume and prices as we saw in 2010, which kicked off the “double-dip”…of course, that only ended in mid-2011 with the introduction of greatest stimulus of all time…Twist and subsequently QE3.
I argue that the Twist/QE3 benefit of rates in 2012/13 — mortgage rates 30% lower than in 2011 — was a much more powerful stimulus than the $8k tax credit.
Thus, the immediate loss of this stimulus should produce a similar (or greater) response as we saw from the loss of the $8k tax credit in 2010.
Of course, even if Bernanke does convince bond players to get back in, he still will have caused a huge, damaging-for-many "hiccup." It will have been a very expensive way of testing the taper-talk waters. We wouldn't have done it.
However, if we're talking about the very long run in terms of the Fed backing out of all of its Great Recession "investments," that's a completely different subject from the most recent spike over just talk of future tapering.