AgentIndustry News

Fed: More interest-rate hikes imminent

Bond-market weakness exerts pressure

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Bond market conditions changed abruptly for the worse, the 10-year rising from 4.12 percent to 4.27 percent Friday, mortgages moving toward 6 percent. The shift is not yet a total breakdown: in the last year the 10-year has been in a wide, sloppy range from 4 percent to 4.4 percent; having tested the bottom for the last 45 days, a move back to the middle is routine. However, bonds reacted to news in unusual ways, suggesting that something bigger than range-wandering is going on. There were two out-of-pattern reactions to news. The largest bond move immediately followed release of a Philadelphia Fed survey on Thursday: economic activity in Mid-Atlantic states had crashed in August, while prices for materials doubled. For most of the summer, bonds have liked news like this, ignoring the inflation component in favor of enjoying the pre-recessionary aspects. Not Thursday. On Friday morning, the second oddity: the University of Michigan's consumer confidence reading for early September ...