Markets & Economy

Mortgage rates are still so low because it’s a big world, full of surprises

Expectations for QE taper, economic acceleration tempered by fragile nature of recovery

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It has been a quiet week for new data, except for the quarterly beaching of the Fed's whale, the Z-1 Flow of Funds tracing the movement and landing spot of every dime in the economy. Long-term rates have stayed under control despite expectations of a Fed QE taper as early as next week, and assumptions of an accelerating economy next year. Mortgages are just above 4.5 percent, the 10-year T-note holding politely near 2.85 percent. Why still so low? It's a big world out there, full of surprises. The Bank of Japan began this year to print an immense volume of yen, a last-ditch effort to end deflation and to get the place growing. The BoJ's purchases of its government bonds have driven their yields below 0.7 percent, negative versus tentative inflation. So to get some real yield, Japanese investors in the last 90 days bought $98 billion in U.S. Treasurys. November retail sales rose 0.7 percent, and October's were revised up to a 0.6 percent gain. The retail sales figures are go...