Industry NewsMarkets & Economy

Economy: Bad is the new good

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Over the holidays, long-term interest rates rose almost a half-percent, the 10-year Treasury note moving into the 3.8 percent range -- the highest since the "double top" last summer. Mortgages have held remarkably well, with the lowest-fee stuff up to about 5.25 percent. A renewed, two-group consensus drove the jump: The economy is in a solid recovery, or even if it isn't, immense Treasury borrowing will force rates higher. Both groups agree that the Fed should stop its assistance, either because the economy no longer needs it, or because even if the economy does need help, to continue assistance would produce inflation. I think this consensus is mistaken. There is no meaningful recovery under way, and the Fed has already pulled up short. More data like today's will add to policymaking tension, force the administration's hand, and soon have the Fed back to buying mortgages, Treasurys or both. Today's payroll report will be spun unrecognizably, but the reality is...