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Commentary: ‘Housing risk ain’t over’

Bubble babble is dead, but we haven't turned the corner yet

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Long-term rates are clinging to their highs (6.25 percent for mortgages, 4.77 percent for the 10-year T-note), but the bond market looks lousy, poised for another rise. The straight-line, quarter-percent rise in rates began in the second week of December, as data began to arrive too strong to support sweet dreams of a Fed rate cut, especially strength in the job market. Unemployment is a dead-low 4.5 percent, and a sustained decline in new claims for unemployment insurance says that conditions are, if anything, improving. The Fed's January "beige book" describes the labor market as "tight," competition developing for scarce types of training and talent, and in the stage historically leading to wage pressure in excess of productivity. Wage-induced inflation is the worst form, quenchable only by racking up the unemployment rate -- which is not difficult to do, except that politicians will then filet and fricassee the perpetrator at the Fed. So far, the tight labor market is just a th...