Long-term rates rose last week as healthy economic data undermined ghoulish bond-market hopes for an economic downturn. The 10-year T-note could not hold its pre-Thanksgiving rally to 4.4 percent and is now back above 4.5 percent; that trade eliminated the chance for mortgage decline toward 6 percent. Fixed 30-year deals are now back at the 2005 high, 6.375 percent. Despite these retracements, the "topping" pattern in long-term rates is still in place. The Treasury 2-to-10 spread is still .1 percent or less, and at one point last week the 5-year T-note yield was slightly under Treasury 2s and 3s. That brief and minor "inversion" (a long-term rate under a shorter-term one) is a precursor for a larger and more significant one likely to develop in the next 60 days. The Fed will go to 4.25 p...
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