It's not enough to move low-fee mortgage rates below 6 percent, but the 10-year T-note flinched at 4.5 percent all of last week, and on Friday morning retraced to 4.38 percent. No data showing economic weakness caused the rate decline: the newest information says the national economy came through Hurricanes Katrina and Rita unimpaired. Two things have helped long-term rates to find a top: the painful understanding that if the Federal Reserve is not yet tight enough to hurt, it soon will be; and second, unstable weakness in the stock market. In the perverse world of bonds, inflation-scare stories help. It goes this way: if inflation is really worse than we think -- under-measured, misunderstood -- then the Fed will have to play catch-up, tightening longer-higher-faster. If the Fed is behind, then catch-up raises the chance of a recession to probable, and in a recession those who own bonds make a ton of money. For the time being, I wouldn't pay much attention to the hobgoblin in ketchup ...
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