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Overconfidence and the recovery

Commentary: 'Now is not the end. It is not even the beginning of the end ...'

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Long-term Treasurys and mortgage rates at last broke out of a half-year-long trading range centered on 2 percent for the 10-year Treasury note, and 4 percent for mortgages. On the upward trend: 10-year Treasurys rose to 2.33 percent today, with lowest-fee mortgages pushing 4.25 percent. The verdict first, then the evidence: This move is not the start of a bigger one, and is likely to reverse. Silly things have pushed this rate run to extreme. The markets oohed and aahed at successful stress tests of 15 of 19 too-big-to-fail banks (the failure of four would crater our system, again); and "inflation knee-jerks" flipped at today's 0.4 percent February Consumer Price Index reading (the core at 0.1 percent is fine, with gas prices compressing other spending and prices). Ten-year Treasurys had for six months stayed tight to 2 percent because the Fed began to buy long Treasurys in its Operation Twist, because Europe was on the edge of its own Lehman moment, and last fa...