"Inversion" is the word blaring from all financial outlets in these holiday weeks. Ignore this word! It may matter later, or not at all, but at the moment it is a numerical curiosity. What does matter: an overlarge two-part bond-market bet. Part One: that the Fed's concluding rate hike will be one last .25 percent on Feb. 1, to 4.5 percent. Part Two: before the end of 2006, a slowing economy will force the Fed to cut its rate. The accumulating weight of chips has pushed the 10-year T-note yield down from its 4.65 percent high in November to 4.36 percent last week, in turn pulling 30-year fixed-rate mortgages down close to 6 percent for the first time since September. This "inversion" business refers to shorter-term bonds paying a higher yield than longer-term ones, which was true from ti...
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