Long-term rates dipped briefly this week on shaky economic data, the 10-year Treasury to 3.59 percent and mortgages to 5.375 percent, but ran right back up in the shadow of another $104 billion in new Treasury borrowing next week. Optimists tried to find a housing bottom in modest rises in starts and new permits, but the reports were garbled by apartment overweight, and the reality is the same: New-home construction is steady 77 percent below the 2005 total. Inflation may come, but not now, CPI up 0.1 percent in May, no way to rise with industrial capacity utilization at a new-record low 68.3 percent (health = 80 percent-plus), and production off another 1.1 percent. Leading indicators put in a second-straight solid increase, up 1.2 percent for May, but the internal components are suspect. One is the rise in long-term rates; in normal times a healthy precursor, but today has undercut purchase-mortgage applications and collapsed refis. All surveys show modest increases in ...
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