Bernanke has been brutally honest with the market, repeating his targets time and time again. And in return, the market has been brutally honest with Bernanke, with investors stomping out of the bond market at the slightest whisper of rising rates.
In both cases, neither side is dissembling or misleading the other. But there’s also a certain pain they hope to inflict on each other, hoping to manipulate the other side to come around to its own way of thinking. Bernanke wants the market to be prepared for the Federal Reserve to stop supporting its profits; the markets want Bernanke to know that investors will do anything to protect their profits, up to and including to hurting the wider economy.
No one’s lying, but no one’s being cautious, either. As the British Conservative politician Richard Needham once said, “people who are brutally honest get more satisfaction out of the brutality than out of the honesty”. That’s where the relationship between Bernanke and the stock markets stand.