Week Info 1/4/2013

Long-term interest rates rose sharply this week, the 10-year T-note's 1.93% the highest since last April, and mortgages above 3.50% the top since summer. Three forces are in play: the Fed's December meeting minutes released yesterday indicated a 2013 end to QE4 bond-buying; second, hints of a better economy; and third, markets less than thrilled by fiscal substance-abusers. As always the economy trumps all, and the first week of each month brings the freshest data. December payrolls grew on forecast, 155,000 jobs, but no change in trend. The ISM manufacturing index in December flipped from just below stall speed at 49.5 to just above, 50.7; and its service-sector twin popped from 54.7 to 56.1. No recession, no acceleration; theories behind either are as suspect as ever since 2009.