Oh, goody. More chaos. Long-term rates all over the world have been cruising lower, pulled down by trouble over there -- trouble which we’ve known about for years, but which Brexit emphasized. The rate downslide got an extra boost from behind last month from news that the U.S. labor market had all but stalled. The U.S. 10-year T-note reached 1.33 percent on Wednesday, an unthinkable new low, and mortgages made it briefly to 3.375 percent. Then Friday morning’s payroll report...252,000 new jobs in June, (net of returning strikers), not quite double forecasts. Now what?!? Fed back in play? Bonds and mortgages clobbered, rates rising? Nah. Nothing changed. Not in markets. Stocks last week were excited about something, but the stock market gets hot flashes about nothing at all. However, I am very much surprised that the bond market has ignored payrolls and other positive incoming data. Mortgages are still under 3.50 percent, and the 10-year right where it was ...
- Long-term rates are affected by trouble overseas, pulling them lower.
- If the picture here is good, how awful does the outside world have to be to hold our rates down this way? Awful, and it is.
- Brexit still gets the headlines, but that story itself gets too much attention. Real trouble lies on the continent.