Mortgages are stuck in a happy place, near 6.5 percent for the low-fee deals, the 10-year T-note's decline to 4.79 percent not enough to move the mortgage market.
At the moment, this whole six-week decline in rates rests on the assumption that the housing market is in a progressive collapse that will soon take the whole economy with it. The bond-betting housing bubblers have one big risk: the only bubble may be in the froth on their own Kool-Aid. Housing is slowing, steadily and a lot (sales of existing homes down another 4.1 percent in July, unsold inventories to a 7.3-month supply, last seen in 1993), but slowing in the real economy is undetectable.
July orders for durable goods rose a modest .5 percent, but on the heels of a big upward revision to June -- so strong that second-quarter GDP growth may be revised from mid-2 percent to 3 percent. The leading indicator for employment is new claims for unemployment insurance, and there is not the slightest upward flicker.
Yes, we're 17 Fed rate hikes deep, but from an emergency low, and now at a rate level at which the economy thrived in the 1990s. The big growth engine is global trade, growing so fast and in so many new ways (electrons!) that economic models and measurement can't keep up, let alone predict.
Read the entire Lou Barnes Inman News article at Citywide Services