First, let me once again state what I told the students at the University of Connecticut School of Business back in early February - the best trade out there is to take a thirty year mortgage. I still believe that; it is a generational opportunity. Let me also tease my quarterly commentary, where I suggest that the most important factor when talking about a 10 year treasury yield rise above 4% is SUSTAINABILITY.
Let's not get too excited that the 10 year traded at 4.0095 on April 5. Rather, let's understand that it quickly retreated below 3.90% - that's what is important.
We are about to enter a period where the rapid recovery in economic data begins to moderate. I expect housing to downtick; I expect the continued limited credit availability to halt the consumer spending recovery. I am not getting bearish about the market, just realistic about economic data.
Therefore, until "final demand" really begins to improve, only a SUSTAINED BREAK ABOVE 4% will get me excited about rising treasury yields.