Can you get to 3% without the fed funds rate going to, say, 1%-1.5%? I don't know. But I believe that there simply isn't that much demand for money that is 200 basis points higher than the 10-year, which is pretty much where mortgage rates are settling out.

So, if rates go to 3%, which is what we thought would happen two weeks ago, would there be demand for 5% mortgage money?

Frankly, I doubt it. Not without more jobs being created. That, on a jobs day, brings me back to this chicken-and-egg conundrum. Without more jobs being created, we aren't going to get the demand for money that would send rates still higher.

Of course, if the government started to furiously print 10-year paper and the Fed decided not to buy any of it, perhaps we would have rates go still higher irrespective of actual demand for money. That's always a possibility. But my conclusion, right now at least, is that 3% is about as high as rates could go on a real tapering, which by the Fed's admission we are not having, and that's why we have been able to settle back into a world where we can pick stocks again without fear of another bond avalanche.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.

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