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All roads lead to global recession

By Lou Barnes, Sunday, June 8, 2008.

In the general chaos Friday, oil in the largest single-day spike ever, near $140/bbl, Dow off 394 points, the only market that did not move was credit.

Mortgages are still near their 90-day high, 6.375 percent, and the 10-year T-note is still in its trading range at 3.92 percent. Long-term rates have held in belief that economic rebound, or inflation, or a weak dollar would force the Fed to raise its rate, and soon. more...

Lousy numbers escape recession dunce cap

By Lou Barnes, Friday, May 30, 2008.

After six weeks in a narrow range, a little not-so-bad economic news blew long-term rates to the highs of 2008: the 10-year Treasury to 4.13 percent (the first time above 4 percent since New Year's) and low-fee mortgages to 6.375 percent. Both of those yields are better this morning, but we will not see five-something mortgages again without a new round of bad economic reports.

The psychology-reversing news came in two pieces. The rout started on Wednesday with the report of April orders for durable goods: down 0.5 percent, overall, but ex-transportation (airplanes and autos) up 2.5 percent, and "non-defense capital goods" plus 4.5 percent. Yesterday's coup de grace: more...

Housing stars in economic freak show

By Lou Barnes, Friday, May 23, 2008.

Mortgage and Treasury rates have stayed within a tight range for six-straight weeks: 5.875 percent to 6.25 percent and 3.7 percent to 3.92 percent, respectively.

Given the lurching in other markets, the credit market stability may seem other-worldly, but it is not -- recent bond trading accurately reflects the current economy. We are still stumbling forward, avoiding one open manhole after another. The cardinal indicator: The labor market is still intact; there are no waves of layoffs; and new claims for unemployment insurance are just as steady as interest rates. more...

Welcome to the Check Republic

By Lou Barnes, Friday, May 16, 2008.

Mortgages and 10-year T-notes tried their tops all week long (6.25 percent and 3.92 percent, respectively), looking like they would break upward ... and held. Rates have improved today, but a run into the fives will require a weakening economy. Name your poison. more...

Bring on the short sales, foreclosures

By Lou Barnes, Friday, May 9, 2008.

Mortgage rates are sliding below 6 percent on a stock market fade, that in turn caused by credit crunch reality: Fear of big-firm dominoes is past, but credit will be scarce and expensive for another year or more. No dominoes, but many, many shoes yet to drop. more...

Don't blame Fed for weak dollar

By Lou Barnes, Sunday, May 4, 2008.

Long-term interest rates stayed about the same (mortgages 6 percent, 10-year Treasury 3.84 percent) as markets quarreled over the meaning of a new mountain of data. more...

Stop the panic; hold the sugar

By Lou Barnes, Friday, April 25, 2008.

Long-term mortgage rates this week stayed about where they were last week, close to post-January highs: 30-year-fixed mortgages were just above 6 percent, and the 10-year T-note was at 3.82 percent.

However, the situation is changing and thick with propaganda. The keys: the difference between a retreat from panic and return to health, and rising global inflation. more...

Worst part of credit crunch far from over

By Lou Barnes, Friday, April 18, 2008.

Psychology on Wall Street changed completely this week, to economic optimism and concern for inflation, and assumption that the Fed is done with rate cuts or will be shortly. Low-fee fixed mortgages are 6.375 percent, jumping with all interest rates, long and short. The Fed-forecasting 2-year T-note has soared from 1.7 percent to 2.24 percent.

This week, "credit" appeared only in sentences including this clause: "The worst is over." The worst probably is over for write-downs of the abysmal "structured securities" of the 2001-2007 era. However, euphoria at that prospect masks these things: the financial system is still too busted to function properly; credit is extremely scarce and expensive; the system is terribly vulnerable to recession-cycle credit loss ahead; and inflation here, there and everywhere is forcing global economic slowdown. more...

Americans to financial leaders: can you guys fix this please?

By Lou Barnes, Friday, April 11, 2008.

More news of a slowing economy today pushed money away from stocks and toward Treasury bonds, but in the routine since January, not to mortgages. The lowest-fee 30-year deals are still stuck just under 6 percent.

Today's surprise was a big earnings miss and write-down at General Electric, which is disturbing because it indicates the slowdown spreading beyond finance and housing (although GE is an immense financial enterprise). The same contagion showed in the newest small-business index (the National Federation of Independent Business), which was down in March to the lowest reading since the second quarter of 1980. In the 28-year interval, unlike measures of consumer confidence, the NFIB has never recorded a false negative: every index downturn has coincided with recession. more...

Top leadership failed in credit crisis

By Lou Barnes, Friday, April 4, 2008.

A steady fade in the job market has renewed concern for recession -- as usual, perversely good news for mortgages, again crossing below 6 percent.

Payrolls in March contracted by 80,000 jobs, and prior months' revisions clipped another 54,000. New claims for unemployment insurance spiked by 38,000 to 407,000, the worst week since Hurricane Katrina. The purchasing managers' surveys showed general business activity neither shrinking nor growing in March, and on a par with February. more...

Bailout is not a four-letter word

By Lou Barnes, Friday, March 28, 2008.

Mortgage rates rose slightly this week, the lowest-fee 30-year from just below 6 percent to a hair above. Spreads still gape versus Treasurys, at 2.5 percent above the 10-year defying all of the Fed's latest efforts. Five-year ARMs, both conforming and jumbo, are better in availability and rate, but both are scarcer and higher than in January.

The economy itself is in a curious place. This morning's report of a half-percent gain in February personal income was head-scratching good news, not squaring with consumer confidence measures at 16-year lows, some components at 41-year all-time lows. more...

Mortgages cheaper this week as gold, oil lose value

By Lou Barnes, Friday, March 21, 2008.

Some progress this week by the authorities has helped mortgage rates fall to the 5.75 percent area for the first time since January. However, the improvement is limited to vanilla "agency" loans, the jumbo and even agency ARM markets still broken. The credit crunch is still alive, growing tighter, and the financial system is unstable. more...

Will Bear Stearns' collapse impact market?

By Lou Barnes, Friday, March 14, 2008.

The collapse of Bear Stearns this morning has pulled the 10-year Treasury yield to 3.42 percent, but lowest-fee mortgages are still stuck above 6 percent. Mortgage improvement was inhibited by fire sales elsewhere (Thornburg and Carlyle), and by Bear's mortgage exposure, the Street's largest. As one of the Fed's 20 "primary dealers," Bear has received instant bailout, but its mortgage portfolio still overhangs the market. more...

Fire sale should knock down bailout resistance

By Lou Barnes, Friday, March 7, 2008.

Mortgage rates spiked to 6.75 percent on Wednesday, only today sliding back into the 6.5 percent range (these rates with no loan fees). There is good reason to expect rates to fall back, and maybe a long way, but only in the context of effective intervention by federal authorities. more...

Starved credit wrecked housing, not vice versa

By Lou Barnes, Friday, February 29, 2008.

Mortgage rates have begun a decline from the irrational levels of the last month, now approaching 6 percent and says here likely to cross back into the fives. more...

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