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Go figure: Investors still pump money into bonds

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Why are investors still buying bonds?

2014 was supposed to be the year the bond market came crumbling down. So was last year. So, probably, will next year.

The anticipation, of course, is that bond-busting inflation is right around the corner and as the Federal Reserve winds down its monthly bond-buying program—quantitative easing—while the economy improves.

Yet despite all the anticipation of money fleeing fixed income and dashing toward equities, bonds continue to get a bid, keeping yields low and confounding those who thought their day was over.

"The market misread the Fed and the economy last year. Investors mistakenly once again assumed that any change from the Fed on the QE side was going to signal imminent rate hikes and a big bear market in bonds," said Robert Tipp, chief investment strategist at Prudential Fixed Income. "That was wrong in 2009 and it was wrong every other time since then up to and including the selloff in 2013."

Indeed, why yields have stayed so low this year has been one of the great market mysteries.

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