As suspected here last week, long-term interest rates have stabilized: the all-powerful 10-year T-note is in a broad range below 5.2 percent, and mortgages are at 6.75 percent to 6.88 percent. Everyone assumes the 10-year T-note will make a run through 5.25 percent, and mortgages will climb to 7 percent, but I don't think we will stay that high unless there is worse news on inflation or the global economy runs away from the central banks. In the last week, the mortgage market has been glued to the demise of two Bear Stearns mortgage investment "hedge" funds. Their rise and demise tells the whole crazy mortgage credit story, abounds in black humor, and presages the untidy conclusion of an interval of excessive leverage in all markets. The funds were created only 10 months ago, the larger f...
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