After parts 1 and 2 on the rate impact of S&P’s downgrade, here are a few new comments before Asian markets open. We’ll continue to discuss rate impacts as this situation plays out.

Friday night, I hear of the S&P downgrade and barely start taking notes when my almost-three-year-old barrels between me and my laptop/notepad, takes my pen, looks at what I’ve written and says: “A – A – A. I’m gonna draw a picture. [then, after drawing what you see below] See the picture I drew? It’s [...]

Rates dropped .125% last week after a string of bad economic reports. Rates touched all-time lows momentarily Thursday after a six-day mortgage bond rally, then retreated (but held 2011 lows) after a less bad July jobs report Friday. After Friday’s close, S&P downgraded U.S. debt one notch from AAA to AA+ with the promise of [...]

There are two statements I would offer about S&P’s downgrade of U.S. debt: 1) S&P’s reasoning about the inability of politicians to address the real issue of fiscal sustainability is 100% correct.

Abnormal Returns masterfully curates the financial media maze daily, and today’s S&P downgrade linkfest is no exception. It’s a broad topic and these links cover the market outlook as well as the political chatter. More on the consumer rate angles coming here on The Basis Point shortly…

-S&P, Moody’s Downgraded to Irrelevant (SmartMoney) -U.S. Moving Away From Reliance On Ratings (Dealbreaker) -Loans With Mortgage Insurance Less Likely To Default (NatlMortgagePro) -Is CFPB Already Helping Banks, Not Borrowers? (HSH) -The Cult That’s Destroying America (Krugman) -10 Google+ Tips & Tricks (Mashable)

Rates were down slightly last week but there’s reason for caution coming into this week: there’s no deal yet on U.S. budget proposals and until there’s a budget agreement, the U.S. debt ceiling won’t be raised.

On this April Fool’s Day, the only fools are those who bet on a worse jobs report. Stocks are up (S&P +11, Dow +92) and bonds are slightly down (10yr Note -16 bps, FNMA 30yr 4% coupon -9 bps) after the Bureau of Labor Statistics showed that non-farm payrolls rose 216k in March and the [...]

We mostly focus on rate and bond markets, but it’s worth noting the opposite side of the trade today. Rates rose about .2% today because manufacturing inflation spooked bond markets, but the inflation is from a good trend of growth (this table shows growth trend). Stocks liked the news, with the Dow ending at 12,040, [...]

The Economist’s cover story headline from last week—Acropolis Now— sounds all the more fitting today as Greece citizens and police clashed in the streets, and the Dow, S&P 500, Nasdaq all erased most of their 2010 gains, and safer bond investments rallied: mortgage bonds are up 43bps, 10yr Treasury bonds up 115bps. When bonds rally [...]