Huge news day with all key data summarized (including charts) in today’s Fundamentals report. Despite rising jobless claims and contracting manufacturing activity, rates are up today for 3 main reasons: (1) Consumer inflation is higher. Rates rise when mortgage bonds sell, and they’re selling today partly because consumer inflation is higher. Inflation makes the future [...]

The current extent of economic malaise has been greatly underestimated. I once again turn to Rick Davis of Consumer Metrics Institute to explain. When we measure GDP we always adjust it for inflation.  We want the economy to be growing because more good and services are purchased by comsumers, companies and the government not because the [...]

Face it: there is no quick fix for the problems in Europe, or in this country. The situation in Europe is worsening, and the fear that sovereign debt would spread has done just that: French, German, and Spanish banks are now viewed as vulnerable since they hold a good amount of poor European debt from [...]

Remember being glued to your computer or TV in Fall 2008 trying to figure out what was next in the market meltdown? The debt ceiling circus in DC and S&P’s subsequent U.S. downgrade have captured consumers’ attention in a similar way. But this topic is much more complicated and consumers mostly get information in two [...]

The highlight this week will be this Friday’s Advance 2Q2011 GDP, the first of three readings. GDP = C+I+G+(X-M) where C= Consumer Spending. I = Investments, G=Government Spending, X=eXports and M=iMports. The advance GDP has only 2 of 3 months data on G and I and can see substantial revision. The range of estimates for [...]

[I'm lucky to have Dick Lepre on my mortgage banking team and as a contributor to The Basis Point because whenever I think I have a market theme pinned down, he'll come in and clarify with a trader's bottom line instinct. One reason is his relationship with Treasury trading vet James Grauer, publisher of Stomaster. [...]

Over the next month I will examine monetary policy in my weekly pieces. To start, I am recycling this piece I wrote last July. Eternal thanks to economist Steve Hanke of Johns Hopkins University who’s taken the time to educate me on these matters. Money Supply and monetary policy are set by the Federal Reserve. [...]

The good news is that rates begin the May 16 trading week near 2011 lows. The bad news is that it’s because of a frail economy. Rates drop when bond prices rise, and mortgage bonds have rallied the last four weeks on lower home prices, weak GDP, and low core inflation. Bonds are topped out [...]

Bonds sold initially, pushing rates up, after today’s 244k new April jobs figure beat 185k expectations for non-farm jobs. But bonds and rates have stabilized as traders study a different aspect of the jobs report: unemployment rose from 8.8% to 9% and the jobs component of the unemployment survey showed that 190k jobs were LOST [...]

Rates ended last week up .125%, which is the smallest increment consumer rates can move. So if you call that a roughly flat week, then it’s the sixth week of flat rates. But this rise is the result of an inflationary tone building in markets, and the latest business and consumer inflation data are released [...]