10-year Treasury Going to 2.25%?

I would like to start by noting that one of the most economically unsettling things is currency instability.  Friday’s equity selling was initiated by a currency crisis in Argentina.  Last Friday I published by weekly newsletter noting that the technicals were forecasting a 2.25% 10-year yield this summer.  the techs never address “why” but it may be the case that the answer was provided that very day.

There are massive currency/inflation problems in Venezuela and North Korea as well.  In 1997 the collapse of the Thai currency subsequent to a decision to float rather than peg the currency caused massive equity selloffs worldwide.  While each currency instability may unfold in a different manner, the cause of currency instability is almost always bad fiscal policy which induces bad monetary policy.

New Home Sales  (December 2013)

– New Home Sales (seasonally adjusted, annualized) 414,000. Previous was revised down to 445,000.

Homebuilders say they are more confident but are not yet building.  That confidence takes time to work through the process of a home actually being built.

 Dallas Federal Manufacturing Survey  (January 2014)

– Business Activity Index +3.8. Previous was +3.1.  Still growing but at a slower pace.

This is a monthly survey of manufacturers in Texas.