The End of QE2

QE2 ended with a whimper on Friday. The 10-year US bond ended the day at 3.2%, defying predictions of many financial market commentators that we'd see rates soaring. I previously argued that soaring rates were unlikely when QE2 concluded.

But, never mind that financial commentators had warned about soaring rates when the 10-year bond rate was 3.6 or 3.7. The small bump to 3.2% after it had briefly fallen to 2.9% is entirely due to irrational optimism that the Greek problem has been solved. It isn’t exactly what financial commentators were telling us would happen with US interest rates.