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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...

Recovery alphabet, government soup

By Lou Barnes, Friday, July 24, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/haarald/3716352899/" target=blank>Hobbes vs Boyle</a>.

Signs of economic bottom, a wild stock market and relentless Treasury borrowing combined to send long-term rates to six-week highs: The 10-year T-note jumped 30 basis points to 4.7 percent, and no-point mortgages reached 5.5 percent.

A crowd of spinners in expensive suits (Larry Kudlow in front) tried to sell bottoming data as recovery, preying on hopes for an end to the Great Recession. The authentic debate is about the shape of recovery: will U.S. gross domestic product "V," like old times? Are we stuck in "L" or "W" futures? Or "V" with a limp and wandering right-side? more...

'Mortgage starvation' stunts recovery

By Lou Barnes, Friday, July 17, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/dotdoubledot/2422647740/" target=blank>sandman</a>.

Long-term rates jumped this week, and the 10-year T-note rose to 3.6 percent from 3.28 percent at last week's low, the principal push delivered by a 500-point surge in the Dow.

Mid-summer is the "silly season," when a shortage of serious news elevates "Man Bites Dog" to the front page. This stock rally was short-covering, and bonds are on constant selling edge because of runaway deficits. New data could be read as green-shoot, or L-shaped non-recovery, but none were trend-changers. more...

Roads to recovery overlooked

By Lou Barnes, Friday, July 10, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/lazymonkey/348573879/" target=blank>Matt and Bess</a>.

Long-term interest rates plunged this week as any hopes for a V-shape recovery gave way to L-shape reality.

A 10-year Treasury auction drew three times as many bids as bonds offered, the yield to 3.3 percent from 4 percent last month taking mortgages under 5.25 percent. The best chance for a run back into the fours: a big break in stocks. Inflation bets sank with rates: oil broke $60 for the first time since April; gold is $912 versus $980 in May. more...

Bond market to Obama: Wake up

By Lou Barnes, Thursday, July 2, 2009.

News of a 467,000-job loss in June, one-third worse than forecast, is hurting stocks but no help to long rates: the 10-year is stuck at 3.5 percent, mortgages just under 5.5 percent.

"Green shooters" say the payroll weakness was magnified by temporary auto-plant closings, and they point to signs of bottom in auto sales and housing prices, and see optimism in the June ISM-manufacturing survey crawling uphill. more...

Low rates: Good news, bad news

By Lou Barnes, Friday, June 26, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/cygnus921/2354592701/" target=blank>cygnus921</a>.

Long-term interest rates have fallen in dramatic fashion in the last 24 hours, the 10-year Treasury-note to 3.51 percent and low-fee mortgages to 5.25 percent.

Inflation freaks and dollar bears caved in, as no data supported their theories. "Green shooters" were confounded by a rise in new claims for unemployment insurance to 627,000, halfway back to the April peak, and their hopes do not square with Warren Buffet's description of the economy as "a wreck." more...

Return of the 'Bond Vigilantes'

By Lou Barnes, Friday, June 19, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/eliogarcia/3243329650/" target=blank>creo que soy yo</a>.

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 ... more...

Definite signs of a false recovery

By Lou Barnes, Friday, June 12, 2009.

Flickr image by <a href="http://www.flickr.com/photos/pierre_tourigny/367078204/" target=blank>manitou2121</a>.

Interest rates stabilized at the conclusion of $65 billion in new Treasury borrowing this week, mostly by sales of long-term bonds.

"Stability" is a relative term: All long-term rates have risen roughly 1 percent in just six weeks, and a further run-up will undercut any economic recovery. The question is whether current prospects for recovery justify this rate-surge, or is this surge already unsustainable? If the latter, what's the chance for a reversal, especially in mortgages? more...

Rate-rise threatens economic relapse

By Lou Barnes, Friday, June 5, 2009.

The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.

Markets first, then new economic data.

The 10-year T-note has jumped to 3.85 percent this morning, the highest since last fall, and even two-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. more...

Market: 'not bottom, not bottoming'

By Lou Barnes, Friday, May 29, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/gregcutler/2726335314/">greckor</a>.

The explosion in long-term interest rates is abating today, but the warning from markets remains stark and bleak.

In one week the 10-year T-note blew from the 3.2s to the 3.7s, now 3.5 percent but far from the 2.5 percent to 3 percent range of Thanksgiving through April. An origination fee bought a four-something-percent mortgage until Wednesday, then 5.25 percent at the top, back toward 5 percent now.

Optimists and worrywarts found what they wished in economic data. more...

New ground for mortgage rates

By Lou Barnes, Friday, May 22, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/thetruthabout/2709292716/" target=blank>TheTruthAbout...</a>.

This week marked the first of several collisions ahead between markets and U.S. plans to borrow. Treasury yields have soared, but mortgages are holding in the fours.

New data failed to reinforce either the "Green Shooters" (economic optimists) or the "Agent Orangers" (economic pessimists), as prior historical guides are unreliable in a brand-new predicament. more...

'Suicide-tight underwriting' pervades markets

By Lou Barnes, Friday, May 15, 2009.

Flickr image by <a href="http://www.flickr.com/photos/royblumenthal/3268717205/">royblumenthal</a>.

To "V" or not to "V" ... that is the question.

The optimists see the steep far side, the middle-roaders see bottom nearby, and the skeptics see the economy still declining, just slower, with possible multiple bottoms ahead.

A 0.4 percent drop in April retail sales was less than the 1.3 percent dive in March, but the weakness still surprised the optimists, who are happy today with an "only" 0.5 percent decline in April industrial production. more...

Risk of 'second Depression' fades

By Lou Barnes, Friday, May 8, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/preciouskhyatt/2175222723/" target=blank>preciouskhyatt</a>.

First, the miracle of loaves and fishes: Economic optimism and immense deficits combined to blow up the Treasury market, but mortgage rates have held in the fours.

The 10-year T-note had traded deeply in the twos since Thanksgiving, never above 3.02 percent, and yesterday spiked to 3.36 percent. With mortgages in the high fours, the spread to the 10-year is as narrow as ever, half last summer's, held only by the Fed's promise to buy another trillion worth of mortgage-backed securities in the remainder of this year. more...

Economy: from freefall to downhill roll

By Lou Barnes, Friday, May 1, 2009.

Flickr credit: <a href="http://www.flickr.com/photos/thepocket/30464789/" target=blank>The Pocket</a>.

Three battles are under way: Treasury borrowing vs. interest rates; slower economic decline vs. bottom; and banks vs. everybody else.

Total Treasury new-cash borrowings this week and next: $171 billion, a tad high (the 2009 two-week average: $75 billion). The Fed on March 18 said it would buy $300 billion in Treasurys this year -- many thought in an effort to control Treasury interest rates, specifically holding the 10-year under 3 percent. Not so: the 10-year is trading at 3.16 percent today. more...

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