Today we received word that they have jumped again from 5.08% up to 5.21%.
Risk free at 4.77% vs. massive risk at 5.21%. Which would you take?
The answer hopefully would be the 4.77%, which is why treasury rates will have to go much lower to keep mortgage rates from exploding higher, or the Fed is going to have to come back into the mortgage market. The only way to get treasury rates lower would be to create a stock market sell-off, (scare people back into treasury bonds) or for the Fed to begin buying treasury bonds again themselves.
Chris Martensen has written another incredible article discussing the future of the treasury bond market (the most important story of this decade). Last year he wrote the original shell game, which was probably the most important article of the year.