What Is the Taper Tantrum? The phrase, taper tantrum, describes the 2013 surge in U.S. Treasury yields, resulting from the Federal Reserve's (Fed) announcement of future tapering of its policy of quantitative easing. The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy. The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.
KEY TAKEAWAYS Taper tantrum refers to the 2013 collective reactionary panic that triggered a spike in U.S. Treasury yields, after investors learned that the Federal Reserve was slowly putting the breaks on its quantitative easing (QE) program. The main worry behind the taper tantrum stemmed from fears that the market would crumble, as the result of the cessation of QE. In the end, the taper tantrum panic was unjustified, as the market continued to recover after the tapering program began.