Markets & Economy

A sustained economic upswoop may come — but it will require sustained data

Liftoff process is going to last a long time, so expect mortgage rate volatility

Long-term rates have run up again, now to levels of last fall: Mortgages are close to 4.25 percent, the 10-year T-note cresting Wednesday just under 2.5 percent. Today, 2.36 percent. Possibly fatal stubbornness, but I think most of this uplurch is a correction from overreaction last winter, not the threshold of a sustained swoop-up. That may come, but it will require sustained economic data at least as strong as this spring’s revival. Beginning midfall last year, Europe appeared headed into deflation. The European Central Bank (ECB) would embark on quantitative easing (QE), but its effectiveness was very much in doubt. Oil crashed, removing all fear of inflation, and a lot of us discounted its stimulus potential. QE in one form or another spread everywhere outside the U.S., producing a dollar rocket, which at minimum created buyers for U.S. financial markets (stocks up, rates down), stimulated all of the export-based economies overseas (that would be all of them), and underc...