Falling bond yields hint at possible recession
Three events last week took mortgage rates back down into the fives: release of the minutes of the Fed's March meeting, news that March retail sales caved-in to energy prices, and a painful and continuing slide in the stock market.
Many loud voices in the bond market had insisted that inflation was in the process of running out of control, and the Fed would begin to jack rates up a half-percent at a time, going to 4.5 percent or more by year-end. Whether this insistence was honest forecasting or phony herd-driving no longer matters: it was mistaken. The Fed's minutes contained this sentence: "Although the required amount of cumulative tightening may have increased, members noted that an accelerated pace of policy tightening did not appear necessary at this time...." Rates fell an instant later.
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