Three vital questions for investors remain unclear as the Federal Reserve prepares to reduce its bond purchases. Will this quantitative tightening cause Treasury yields to rise or fall? Will stocks do better with rising or falling bond yields? And, related question, is the equities-bond relationship that has existed for the past three decades being reversed?

Few share my first uncertainty, because it seems so obvious that if the Fed buys fewer Treasuries, the price will go down and therefore the yield will go up. This is the basic supply and demand, goes the answer: Duh.

It is certainly true that all other things being equal, fewer bond purchases should mean higher returns. But not everything else is equal, as the Fed’s discussion of withdrawing stimulus measures shows a shift in mindset towards tighter monetary policy. Tighter monetary policy means less long-term growth and inflation, and therefore lower long-term bond yields. The balance between the impact on demand of lower Fed buying and the perception of policy tightening will determine whether 10-year yields rise or fall, and it is not obvious to me in which direction they will go.

Wednesday and Thursday of last week provided a first test, as stocks and commodity prices fell around the world after the Fed minutes showed the central bank was heading for a cut in bond purchases This year. After a brief rally, 10-year rates retreated.

The first market moves also provide a guide to the second uncertainty: Ending the Fed’s bond purchase could be bad for stocks. We have to be careful with gravity, however, due to the uncertain interplay of two forces. Tighter monetary policy on its own is bad for stocks, but the stronger growth that usually causes the Fed to tighten is good for stocks. Since around 2000, this has manifested itself as a strong short-term correlation between rising yields and rising stock prices (despite the fact that over the years stocks have gone up and returns have fallen).