Long-term rates rose this week -- not a lot, but summer rates have not been able to penetrate the lows revisited in October. I would say that confusion about the future course deepened, but it can’t get any deeper. Long rates rose a little after the Fed’s meeting broke on Wednesday and it issued another tortured statement, but the rate-spike was the next day, reacting to a third-quarter (Q3) GDP (gross domestic product) report better than expected. Maybe it was. In the old story, a person caught by a spouse in bed with someone other than the spouse says, “Are you going to believe me, or your lyin’ eyes?” The “advance” Q3 number, to be revised: 1.5 percent growth, roughly as expected and unimpressive. However, consumer spending improved a good trend, up 3.2 percent, and had it not been for falling inventories overall GDP would have grown about 3.0 percent. This inventory business should always be short-term back-averaged to find trend. Q2 GDP was 3.9...
- Housing data is okay, but slowing in both volume and price gains.
- Any economic observer knows that the world outside the U.S. is in trouble and exerting deflationary pressure here.
- The Fed is divided into three camps: hawk, dove, and not sure -- and the camps are farther apart than any time in my memory. They're on the edge of screwing this up.