If the economy continues at its current pace, the risks of tightening far outweigh the risks of not

  • 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.

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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.