Mortgage

Interest rates will stay rock bottom as long as the economy keeps puttering along

This Fed is keeping an eye on events, not following a predetermined timeline

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Interesting, go-figure week. New economic data were strong but ignored by markets; Federal Reserve Chair Janet Yellen made dovish speeches, which revived the stock market; and Ukraine (back from the brink) removed a safety bid from bonds. March retail sales and a February revision doubled forecasts, both months up 0.7 percent ex-autos. March industrial production likewise rose 0.7 percent. Last week's drop in new claims for unemployment insurance was not a fluke, near 300,000 again, a 2007 level. Bond screens did not flicker on that good news, but they did when Yellen spoke. She identified the three unknowns most important to the Fed: the degree of slack in the labor market; inflation so far below target; and externals that might derail recovery, implying concern for fragility. She emphasized the Fed has been "forced to rely on two less familiar policy tools … forward guidance and large-scale asset purchases." Then this splendid clarifier of the March meeting: "The larger...