It has been a quiet week for new data, except for the quarterly beaching of the Fed’s whale, the Z-1 Flow of Funds tracing the movement and landing spot of every dime in the economy.
Long-term rates have stayed under control despite expectations of a Fed QE taper as early as next week, and assumptions of an accelerating economy next year. Mortgages are just above 4.5 percent, the 10-year T-note holding politely near 2.85 percent.
Why still so low? It’s a big world out there, full of surprises.
The Bank of Japan began this year to print an immense volume of yen, a last-ditch effort to end deflation and to get the place growing. The BoJ’s purchases of its government bonds have driven their yields below 0.7 percent, negative versus tentative inflation. So to get some real yield, Japanese investors in the last 90 days bought $98 billion in U.S. Treasurys.
November retail sales rose 0.7 percent, and October’s were revised up to a 0.6 percent gain. The retail sales figures are good, but were boosted by giveaway discounts, and by one of two areas in which if you want a loan, you get one: to buy a car (the other, to go to college).
All of that howling about the perils of shutdown was a tad overdone, but it did have one clear effect: Both parties in Congress learned that voters are tired of the show and in a mood to throw everybody out. Thus we got two-year mini-deal on the budget. “No progress and quiet” beats “no progress and noise.”
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”