The following is the view of Hurricane Katrina as seen by the average ghoul in and near the bond market. For that, I apologize. Katrina has caused a nosedive in Treasury rates, a reconsideration of the state of the economy and the Federal Reserve's intentions, but so far has taken mortgage rates down only about an eighth of a percent from last week, near 5.625 percent. Traditional economic indicators aren't worth much now: anything pre-Katrina is Jurassic Park; anything post-disaster will be garbled for months. Pre-Katrina there was already an argument about the economy, and the bond market by last week had priced-in not only an end to Fed tightening, but an economic slowdown next year and probable Fed reversal. Federal Reserve Chief Alan Greenspan and others very much disagreed. The financial markets vacuum up information and in real time build it into market prices. Perhaps the best indication of the effects of Katrina on the economy, including the effects of unfolding energy-supply...
by Amber Taufen | Today 12:27 P.M.
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