Katrina is fading in the bond market's rear-view mirror. Rates are back where they were two weeks ago, the 10-year T-note above 4.1 percent, mortgages 5.75 percent, save a residual bid in the 2-year T-note, placed by the few still hoping that Katrina will force the Fed to back off. Give that up. Expect the Fed to proceed with another .25 percent on Sept. 20, Fed funds to 3.75 percent, and another Nov. 1 and Dec. 13, and continuing until the economy slows, housing first. How can Katrina have had so little impact? Why no 9/11 follow-through? 9/11 itself, as a financial matter, lasted barely 90 days. The follow-on Fed easing and near-hit deflation were stock-bubble artifacts. The main economic impact of 9/11 was the total shutdown of Wall Street for 10 days, whereas the Gulf Coast is one...
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