Wall St. drunk on money and power

Mortgage market commentary

As suspected here last week, long-term interest rates have stabilized: the all-powerful 10-year T-note is in a broad range below 5.2 percent, and mortgages are at 6.75 percent to 6.88 percent.

Everyone assumes the 10-year T-note will make a run through 5.25 percent, and mortgages will climb to 7 percent, but I don’t think we will stay that high unless there is worse news on inflation or the global economy runs away from the central banks.

In the last week, the mortgage market has been glued to the demise of two Bear Stearns mortgage investment “hedge” funds.