Through 'Forward Guidance' the Federal Reserve has stated in 2011 that interest rates (more accurately the 'fed funds target rate') in the U.S. would very likely remain at 0% for at least two more years. What will this mean in for the bond market?

Yields for two-year government bonds were close to 0 in 2011 due to the expectations theory of the yield curve.

Short term bond yields rose across all maturities leading to an inversion of the yield curve.

Yields for two-year government bonds rose since now holding 'fed funds' became a lot more attractive.

Since the Federal Reserve had lost credibility in financial markets during the panic of 2008, inflation expectations (measured by the spread between nominal and TPIS bonds) rose to more than 5% after the announcement.