My theory is that the market knows the economy is weaker than reported and that interest rates are not likely to rise soon.
If course they know it. Everyone knows the unemployment figures are complete propaganda.
The question is really, how is the fed keeping interest rates low while supposedly tapering? The fed, in some underhanded fashion, is helping manufacture ersatz demand for the treasuries it is now not buying.
Consider this, regardless of the so called strength of the US economy, even supposing it were robust and real unemployment was low, the federal government CANNOT pay higher interest on the federal debt. Traditional level, i.e. real market, interest rates will cause the cost of the federal debt to consume the *entire* federal budget. The fed and DC are dancing as fast as they can. The very simple fact is that, to avoid an unprecedented disaster, they will *never* be able to allow interest rates to rise much at all. Never.