It is reassuring when the world behaves as it should. The last couple of weeks have been disconcerting -- how have we seen such a huge decline in rates without a bounce-back? It’s okay now. Rates are rising. The jump last week had several propellants. The first is simply the nature of markets: any big move begets a counter-move. In 10-year T-note terms, from June 1 at 1.83 percent down to 1.36 percent (July 8) and now back up to 1.59 percent. In mortgage rate terms, 3.625 percent to 3.25 percent (for about an hour), back to 3.50 percent. However, that “retracement” does not answer the questions everyone has: Will we go back down, and if so, when? Economic data says “not soon": Since the rate plunge intensified upon Brexit, essentially every new U.S. point of data has been stronger than estimated -- jobs, Institute of Supply Management (ISM) indices, small business, retail sales, the works. The full answer lies overseas. U.S. 10-year Treasurys and German 10...
- The last couple of weeks have been disconcerting -- how have we seen such a huge decline in rates without a bounce-back?
- Last week, rates had several propellants to jump, most of them from overseas: The U.S. economy is OK; Europe is not.
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