Downturn strikes economy

Mortgage rates to remain below 6.5% into '05

Financial Frances made landfall in New York at 8:30 this morning.

Right, wrong, or subsequently to be revised, high winds from the Labor Department brought word of new jobs added to payrolls. Not a lot of them 144,000 in August, and another 59,000 found washed up on the beach from June and July but enough to lift interest rates.

Mortgages are rising toward 6 percent; the 10-year T-note is trading at 4.29 percent, decisively out of its 4.08 percent-4.18 percent gloomy-pleasure range; and the more dramatic 3.3 percent-to-3.5 percent move in the 5-year indicates unanimous expectation of another .25 percent from the Fed at its meeting in three weeks. That move, from 1.5 percent in the overnight cost of money to 1.75 percent, had been considered hostage to today's job data.

The damage from the payroll news would have been worse had all other indicators not been weak weak here in the United States, and among trading partners.

In early summer Federal Reserve Chairman Alan Greenspan insisted that a sudden economic slowing after a sparkling spring was merely a "soft patch," a gathering of breath before resumed vigorous expansion; he observed further that all long-running expansions include intermissions. Four months later, there isn't anyone left in the financial markets who believes in his benign description of a more persistent slowdown (aside from the always hopeful pushers of stocks).

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