The Treasury-bond market has had its best week in 18 months, the 10-year T-note today 4.61 percent, and that dragged low-fee mortgage rates below 6.5 percent. The improvement in mortgages was not as big as the Treasury move, but catch-up trading should soon take us to 6.25 percent. The unsettling backdrop to this decline: nobody has a good explanation for why. A drop in long-term rates at the end of a Fed tightening cycle is always associated with a slowdown in the economy, usually an abrupt one. Consistent with that thought, the bond market broke to six-month lows Thursday instantly after the Philadelphia Federal Reserve reported a surprise contraction in business activity. The Philly Fed's index is a minor affair, covering manufacturing in Mid-Atlantic states; it is brand-new news of September conditions, and it could reflect a brand-new downtrend in the national economy. It could, but nothing else does. The four-week average of new claims for unemployment insurance remains rock ste...
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