Ten Year Treasury Note back below 2.5%

My thesis is that the recent sharp spike higher in interest rates on the longer end of the yield curve sent shock waves and convulsions into the hallways of the Federal Reserve's headquarters. This is why I maintain that Chairman Bernanke's abrupt reversal and subsequent contradiction of his June comments concerning tapering of the bond buying program was so forthcoming.

The Fed watched in horror as the bond vigilantes did their thing and took interest rates higher. Concerns began arising that the higher yields were already pushing prospective home buyers out of qualifying for certain properties and were reducing downward the size and price of the homes that they were able to quality for.

Enter the Chairman and VOILA!.... presto, change-o, down comes the yield on the Ten Year to back below the 2.5% level. It is going to be entertaining to say the least to see how this all important indicator behaves as we move deeper into the latter part of this year.

My guess is that if it gets too disobedient and begins to climb too sharply once again, we will see more backtracking from the respective Fed governors about the pace of the tapering....