Weekly Info 02/01/2013

The sustained rise in long-term rates in January has stabilized for the moment. Mortgages have risen from 3.50% or below in the prior five months to roughly 3.75%, and the almighty 10-year T-note from a centerline near1.75% to almost 2.00%. The rise has been puzzling. The Fed committed just last fall to buy $85 billion each month in MBS and long Treasurys, with the expressed purpose of holding rates down until our economy turns sharply better. Which it hasn't. So, why the rate rise, one nearly always reflecting an improving US economy? In a precursor of our long-term future, rates have risen because forces overseas are larger relative to the US economy than at any time in more than a century.