The Fed's latest 'quantitative easing' program is designed to bring down interest rates

Rates, which rise as the price falls, have risen lately as investors avoid U.S. government debt--including a new 30-year bond auctioned on Wednesday. That has generated market anxiety that the Federal Reserve has lost control of rates and inflation expectations.

But many observers are waiting for the Fed to at least start the program before making any judgments about it. The rise in yields on 30-year bonds hasn't been duplicated among shorter-duration bonds, which the Fed says it will focus on buying, and has been less pronounced for the more-important 10-year Treasury note, which is the benchmark for mortgages and corporate debt.

'It is premature to say that the Fed has failed or that this has backfired,' said David Ader, chief government bond strategist at CRT Capital. 'Logic tells me that, once the program gets under way and people are selling to the Fed, that rates will go lower, significantly so.'

That is the Fed's plan. The Fed last week committed to spending a total of $600 billion in freshly printed money on Treasurys before next June, effectively soaking up all of the new debt issued by the government.

The program of buying Treasurys is designed to keep Treasury yields low, thereby stimulating the economy and pushing investors into riskier assets such as stocks and corporate bonds. That's part of the Fed's state goal of fighting deflation.

The New York Fed will begin buying on Friday with purchases of $6 billion to $8 billion, according to a schedule released by the central bank on Wednesday. By Dec. 9 it plans to have bought about $105 billion in Treasurys, including a handful of Treasury Inflation-Protected Securities, or TIPS.

Having such a big, unflinching buyer in the market should keep prices high and yields low.

But the opposite has been happening lately. A Treasury auction of $16 billion in new 30-year bonds on Wednesday was poorly received, with the government having to pay a slightly higher yield than expected to attract buyers.

The 30-year Treasury bond's price has fallen nearly 12% since Aug. 26, just before Fed Chairman Ben Bernanke hinted at QE2 in a speech at Jackson Hole, Wyo. Its yield has jumped to 4.239% from 3.53% in that time, and at one point on Wednesday surged to the highest since May.

And Treasurys have weakened despite fresh fears about European sovereign debt, which in the past has been a boon to safe-haven U.S. government debt.

The weakness in the 30-year bond is not terribly surprising. The Fed has said it won't buy much 30-year debt. It stuck by that commitment in Wednesday's schedule, dedicating just about 4% of its purchasing power to longer-dated bonds.

Still, the 10-year Treasury note, which will get much more Fed attention, has suffered, too. Since Aug. 26, the 10-year note yield has risen to 2.657% from 2.50%.

The 10-year yield is of more practical importance to the Fed, given its influence on mortgage rates and other borrowing costs.

Some argue that the rising interest rates are a sign that the Fed may be doing too much and that inflation will come more quickly than it wants.

'Credibility is essential for a central bank to achieve its goals, and it appears the interpretation of the Fed's intentions has already rendered such activity ineffective,' Russ Certo, co-head of rates trading at Gleacher & Co., said in a note, 'and this is before it has even started.'