Is the Fed trying to ‘fool’ the bond market?

Has the Fed lost control of the bond market?

A sharp rise in U.S. Treasury yields should act as a reminder to the Federal Reserve not to ignore developments in the bond market as it deliberates when to pull back its hefty monetary stimulus, one market analyst told CNBC.

The yield on the benchmark 10-year Treasury is trading around 2.71 percent, up about 20 basis points from where it was a month ago.

(Read more: Where are Treasurys going? Just watch gold)

"Putting aside what the Fed wants to do, the bond markets have tightened for them [policymakers]," said Peter Boockvar, chief market analyst at The Lindsey Group, a Washington-based economic advisory firm.

"Interest rates are up dramatically in the U.S., off the early summer lows, and that's something that the Fed shouldn't ignore. It fooled the bond market once in early September when it did not taper," Boockvar told CNBC Asia's "Squawk Box."

Daniel Acker | Bloomberg | Getty Images

"It will be very interesting to see how they treat the bond market in the next couple of meetings since we are at 2.70 percent in the 10-year [Treasury]," he said.

Many economists expect the Fed to start unwinding its $85 billion-a-month bond buying program in the first quarter of next year in response to signs of strength in the U.S. economy.

(Read more: Fickle Fed: Taper could arrive in 'coming months')

Bond yields have been rising since early May in anticipation of the Fed tapering. The concern about yields rising too quickly is that they could derail a recovery in the housing market, and in turn the economy, since yields on Treasurys affect the interest rates on fixed-rate mortgages, analysts say.

"What we have is still a fragile economy where consumption and investment are still not seen as strong enough to drive growth, so there is a feeling that the Fed has to continue to support growth," said Timothy Riddell, head of global markets research for Asia at ANZ Bank in Singapore.

Bubble about to pop: David Stockman

Indeed, the move in the Treasury markets in recent months has raised some concerns about bond yields rising too fast, too soon.

CNBC host and former hedge fund manager Jim Cramer said in June that the sharp rise in Treasury yields was a sign that the Fed had "lost control" of the bond market.

(Read more: Cramer: Bernanke's Fed has lost control of the bond market)

"We saw 2.80 percent [on 10-year yields] just last week, so we could easily see that in a matter of days if we get a good number on the jobs data, so next week is a really important week," Boockvar said, referring to the release of the key monthly U.S. jobs report next Friday.

Riddell at ANZ Bank said the rise in Treasury yields was contained and reflected a move back from low levels when markets were braced for a period of weak growth and no inflation. The yield on 10-year bonds fell to a record low around 1.38 percent in July 2012.

"We're looking at yields pushing up towards the 3-3.5 percent level over the course of the year, which I would say is a controlled rise in long-term yields," he said.

"It's a natural response that once the healing process [of the economy] becomes embedded, yields rise, markets have to expect that," Riddell added.

—By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC