Economics 101

Why Rates Are Up Today Despite Weak Manufacturing, Rising Jobless Claims

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

Has a Double-Dip Recession Already Happened?

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

How Europe’s Woes Help U.S. Rates

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

U.S. Can’t Afford To Go Out Tonight. OK, Just 1 Drink.

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

Fundamentals 7/25: 2Q GDP Preview

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

What To Expect From Rates After QE2: James Grauer

[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.