No test, no nothing. Rates on the 10-year horizon hit 4% the other day and reversed big time. It's as if someone pulled the plug.
Funny thing about markets. They can run from one extreme to another in a moment's notice. What has changed? Not much. A few comments here and there. In the end, the world is not much different than it was last week but the 10-year rate has dropped 30 basis points in nearly a straight line move.
Unless the stock market collapses here, I would expect the rates to turn and again test 4%. Seems like a good place for it to be. But it's not such a friendly number for the housing market or the Fed's balance sheet (if they use mark-to-market which they probably won't). In the end, it just shows how overbought or oversold markets will try your patience but in the end, they always get normal again. It's why your capital backing your derivatives trading is so important. Markets can remain irrational much longer than you can stay solvent. Risk management and strong capitalization is usually the key to sustained success in these kind of markets.