Can the markets override an inept Federal Reserve?

You’ve all heard the call for higher rates around the marketplace despite pathetic releases in Housing and Manufacturing data.  The Federal Reserve initially hinted that the next step may be up in rates, however economic fundamentals are making it almost impossible for them to do so.  The question now is that given that a majority of Fixed Income investors and speculators have positioned themselves for higher Yields and lower prices…can the markets override the inability of the Fed to take action and provide profits for these market players?

What this really refers to is that can investors and traders shy away from Treasury securities so much that they push market rates higher regardless if the Fed hikes or not?  One factor that helps their plight is that Yields are increasing around the globe.  However, one major danger is that if rates do not go up soon, there is a sizable amount of Treasury short positions out there that would feel the squeeze and cover their positions.  This would result in a precipitous decline in market rates.  So what’s the answer??? Time…if rates somehow creep down on 10 Year paper over the next week, the result could be a shot down in Yields as opposed to a shot up.