Last summer's rate panic reached this same point–6.5 percent for low-fee 30-year loans–and then retreated, in nine months back to the sub-5.5 percent record. This time there will be no retreat–not far, anyway. The bond market is oversold, and due for some "technical" improvement, but there are times when a market should be oversold. This is one of those times. Last year's panic ignited on news that the overall growth rate of the economy had suddenly shot out of post-bubble mire, but the Fed's "...considerable period..." language quickly calmed the market, and the wintertime fade in job creation quieted things altogether. This time–no help for the wicked. The Fed is not going to reassure anybody. Its statement this week was clear: "...policy accommodation can be removed at a pace that is likely to be measured." We all know that a 1 percent Fed funds rate is too low (too stimulative...too "accommodative," in Fedspeak), but nobody alive knows the Fed funds rat...
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