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All roads lead to low rates

By Lou Barnes, Friday, November 6, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/sidewalk_flying/3929076354/" target=blank>sidewalk flying</a>.

Today is a strange day in a strange time.

The Fed has begun gradually to withdraw support for the mortgage market, but mortgage rates are improving (back toward 5 percent) versus the 10-year Treasury.

The unemployment rate spiked to 10.2 percent, but "nonfarm payrolls" in October, net of prior-months' revisions, contracted far less than expected: only by 97,000 jobs. more...

Low prices not helping housing

By Lou Barnes, Friday, October 30, 2009.

Credit markets shrugged off news of 3.5 percent gross domestic product growth in the third quarter, and the 10-year T-note has repeatedly held tests of 3.5 percent (3.41 percent now), mortgages 5.125 percent or better.

The GDP news intermittently ignited the stock market and caused new speculation that the Fed will soon make noises preliminary to tightening credit. (Razzing from the skeptical side: If the Fed tightened credit, how could anyone tell?)

Stripped of "Cash for Clunkers" and weird inventory adjustment, GDP really grew only about 1.5 percent, and that was mostly due to other government stimulus. more...

Give the buck a break

By Lou Barnes, Friday, October 23, 2009.

Flickr image by <a href="http://www.flickr.com/photos/hammer51012/3010232028/" target=blank>Hammer51012</a>.

Treasury and mortgage rates have again reached their post-August highs, but still in tight ranges: the 10-year Treasury note at 3.48 percent and low-fee mortgages just under 5.25 percent.

The producer price index fell hard in September, down 0.6 percent, the much-hoped-for re-building of inventories not yet under way. Initial claims for unemployment insurance unexpectedly rose, back in the 525,000-550,000 weekly band. more...

Pig-in-a-python economics

By Lou Barnes, Friday, October 16, 2009.

Flick photo by <a href="http://www.flickr.com/photos/gloriapayne/2913733628/" target=blank>♥ Morning Glory ♥</a>.

Long-term rates rose again this week, the 10-year Treasury note and mortgages continuing the spurt that began last Friday, to 3.46 percent and just shy of 5.25 percent, respectively.

As always, economic optimism was the cause. In legitimate good news, retail sales rose in September, only 0.5 percent net of "Cash for Clunker" effects, but beat the forecast decline and have been stable for three months.

Also, new claims for unemployment insurance have continued their glide-path decline, now about 150,000 weekly below the April peak at 668,000, but still 200,000 weekly above anything resembling health. more...

Who is in charge here?

By Lou Barnes, Friday, October 9, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/devnull/194923942" target=blank>dev null</a>.

Long-term rates are rising today, the all-important 10-year Treasury suddenly above the 3.16-3.28 percent range that gave us sub-5 percent mortgages for the first time since spring. Gone now, pushing 5.125 percent, the 10-year trading 3.37 percent at this moment.

Ordinarily, a range breakout like this would signal a run to the top of the old range, 10-year Treasurys testing 4 percent as in summer, mortgages at 5.75 percent. However, nothing in this moment is ordinary -- not remotely predictable with normal tools. more...

Wheels of stimulus spinning in place

By Lou Barnes, Friday, October 2, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/royandsusan/2912592049/" target=blank>roy.susan</a>.

Believers in "V"-shaped recovery gave it up this week, as did many hoping for any near-term recovery at all. The 10-year T-note broke cleanly through its post-May 3.28 percent low, taking mortgages below 5 percent, also for the first time since spring.

The manner in which the bond market cascaded said more than the fact. There was no new, single-piece, trend-changing report, just the cumulative weight of news describing an end to the May-July bright interval, and the beginning of an economic flattening or outright stall sometime in August. more...

Beware undertones in Fed-speak

By Lou Barnes, Friday, September 25, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/icco/2246383366/" target=blank>Nat W</a>.

Long-term rates are again approaching four-month lows, with 10-year T-notes just above the magic 3.28 percent level; break that and low-fee mortgages will cross just under 5 percent.

If that blessed moment should arrive, do not wait for lower or expect sub-5 percent to last more than a few hours: Surviving mortgage lenders will yell "Now!" to a few million boat-missing refinance candidates, and that renewed demand must be worked off before any deeper drop. more...

Too many numbers, too little credit

By Lou Barnes, Friday, September 18, 2009.

Flickr image by <a href="http://www.flickr.com/photos/lrargerich/3029485203/" target=blank>lrargerich</a>.

Long-term interest rates slid a little this week, but confined in a tight, 30-day range: the 10-year T-note between 3.5 percent and 3.28 percent, and mortgages close to 5.25 percent.

The media are now giving every possible positive spin to new data, which are in reality still ambiguous: Ever-so-slight improvements look more like floors than durable uptrends. Retail sales did pick up 1.1 percent in August, excluding "Cash for Clunkers," and industrial production rose 0.8 percent, that gain bloated by "Clunkers" and still 10.7 percent below last year. more...

Progression in a recession?

By Lou Barnes, Friday, September 11, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/oranguchang/3530584234/" target=blank>orangachang</a>.

Long-term rates are very close to breaking the post-May lows, the 10-year at 3.28 percent, and mortgages are doing even better, sliding toward 5 percent.

We are moving into the next economic phase as well as the next stage of understanding, the two working together to change the credit markets. There is always some gap between economic reality and our grasp, but this two-year event, so extreme and out of prior pattern, has produced a chasm between competing theories. more...

Chips down, Fed plays waiting game

By Lou Barnes, Friday, September 4, 2009.

Flickr image by <a href="http://www.flickr.com/photos/jamadams/564143766/">Jam Adams</a>.

The August slide in long-term rates found bottom this week, with the 10-year T-note briefly to 3.28 percent (3.37 percent today), and lowest-fee mortgages to 5.25 percent.

The last time it was so low was during a single week in early July, the best since a general rise began in early May. To break through these levels would require a sharp thump in the stock market or newly weak economic data; pushing the other way is constant Treasury borrowing and a great deal of refinance demand just above 5 percent.

The most mighty gorilla of all data, first-Friday payroll data for the prior month, arrived today right on forecast: 216,000 jobs lost in August, and 49,000 more shaved from summer estimates. more...

Positive signs amid warning signs

By Lou Barnes, Friday, August 28, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/yorkjason/162041457/" target=blank>Napalm filled tires</a>.

In this last, drowsy week of summer, long-term rates were unchanged: the 10-year T-note held under 3.5 percent, lowest-fee mortgages about 5.25 percent.

Summer has another three weeks to run to solstice, but it's all hands on deck next week before a late Labor Day to deal with the first August data, especially Friday's employment report. The change in payrolls announced that morning will clarify the dispute among the recovery camp, the stabilizing crowd, and the double-dippers. more...

No loans in 'Wonderland'

By Lou Barnes, Friday, August 21, 2009.

Flickr image by <a href="http://www.flickr.com/photos/kryten/104208165/" target=blank>Robert Whitehead</a>.

In a considerable achievement, Treasury and mortgage rates held last week's improvement: the 10-year T-note near 3.5 percent, mortgages 5.375 percent.

To have held during one of the thinnest trading weeks of the year, in which a butterfly wing-beat can blow up any market; in the week before the Treasury's next borrowing wave ($109 billion new cash next week); stock market antigravity; and interpretation of all incoming data as "recovery" -- quite an achievement. more...

Clinton's Law: 'It's the economy ...'

By Lou Barnes, Friday, August 14, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/brent_nashville/166218527/" target=blank>Brent and MariLynn</a>.

Long-term interest rates fell this week, and a lot: the 10-year T-note from its 3.85 percent peak last week to 3.51 percent, which took mortgages from 5.75 percent to 5.375 percent.

This move thoroughly contradicts the one-way stock-market exuberance and the inventive reading of new data and the Fed's post-meeting statement.

One day, when the "Green Shooter" economic optimists have it right, the bond market will get killed by the news, rates racing up. more...

Cash for Global Policy Clunkers

By Lou Barnes, Friday, August 7, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/dno1967/3786592934/">dno1967</a>.

A job-market surprise has reinforced the economic optimists and pushed long-term rates close to their highs of the year: the 10-year T-note to 3.86 percent, lowest-fee mortgages to 5.75 percent. The stock market is ecstatic, continuing its straight-line July run -- the S&P 500 at 1,015 today, the highest level since early October.

In this morning's report, payrolls lost only 247,000 jobs in July, a hundred thousand fewer than most forecasts and barely half of the June losses. This first-Friday monthly employment report gets more attention than any because jobs drive consumption and tax revenue. If too cold they drive recession, if too hot: inflation. more...

Difficult economic equations: Do the math

By Lou Barnes, Friday, July 31, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/sloth_rider/392367929/" target=blank>.A.A.</a>.

Interest rates are a hair lower at week's end, more in relief that another massive Treasury borrowing -- $109 billion in term debt alone -- came off without injuries.

However, long-term Treasury rates have been elevated since May, pushing mortgages to 5.5 percent, past the edge of refinance demand, and near the limit of buyer demand. The economy is living on government spending, in today's report up 5.6 percent in the second quarter, but consumer spending falling faster than GDP, -1.2 percent vs. -1 percent. more...

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