More increases expected
The 10-year Treasury note has held below 4.75 percent, in turn holding mortgages below 6.5 percent, both despite certain knowledge that the Federal Reserve will raise its overnight rate on Tuesday to 4.75 percent and very likely signal intentions for one or more hikes ahead.
After next week, the Fed will not meet again until May 10. If the economy does not tank in the meantime, and markets follow the mechanical pattern of the last two Fed hikes, then in April the 10-year note will move toward 5 percent and mortgage rates will rise above 6.5 percent.
The economy is a long ways from the tank, but the newest data are nowhere near as strong as the stock market boomers would have it. Orders for durable goods, a key barometer for business investment and confidence, were flat in February (ex-aircraft). The first gain in sales of existing homes in six months had help from warm weather, but new-home sales dived 10.5 percent anyway. Mortgage purchase applications fell again, down 26 percent from last June; the economy-lubricating refinances down 47 percent.
Federal Reserve Chairman Ben Bernanke this week gave his first big speech. His writings before he sat down in the chair were fluid prose, rich with imagery and explanations useful for civilian readers. This first speech was anything but that; this one was in the style of a top-gun professor to an unruly crew of Ph.D. candidates whom the professor thought needed to be taken down a peg.
Former Fed Chair Alan Greenspan wrote and spoke in a kind of genetic code, pages and pages of ACTCAGTTTACTCGACT