Long-term rates fell to a new post-April low yesterday, but are giving back the gain today. The 10-year T-note traded as low as 4.06 percent (back to 4.12 percent now), and the lowest-fee 30-year mortgages briefly made it to 5.625 percent. The rally yesterday broke through "technical resistance," which often precedes a deeper decline, but I think this time will not. We are sitting here, barely a half-percent above the all-time mortgage low; the Fed is going to raise its rate from 1.5 percent to 1.75 percent on Tuesday, and again to 2 percent before the end of the year, and there is just not room above the rising cost of money for long-term rates to fall. For bonds to fall below 4 percent and mortgages under 5.5 percent, we need the economy to slow enough to knock the Fed out of its back-to-neutral campaign. That development is not in prospect: August retail sales fell .3 percent but rose .2 percent, excluding sick autos; August industrial production gained only .1 percent, but July w...
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