Bond market conditions changed abruptly for the worse, the 10-year rising from 4.12 percent to 4.27 percent Friday, mortgages moving toward 6 percent. The shift is not yet a total breakdown: in the last year the 10-year has been in a wide, sloppy range from 4 percent to 4.4 percent; having tested the bottom for the last 45 days, a move back to the middle is routine. However, bonds reacted to news in unusual ways, suggesting that something bigger than range-wandering is going on. There were two out-of-pattern reactions to news. The largest bond move immediately followed release of a Philadelphia Fed survey on Thursday: economic activity in Mid-Atlantic states had crashed in August, while prices for materials doubled. For most of the summer, bonds have liked news like this, ignoring the i...
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