Rory Robertson
Rory Robertson
cash critical dropped hands limit limiting mortgage rates rise sharp threatens
The sharp rise in mortgage rates that is now under way threatens to limit the refinancing boom, limiting the cash that will be dropped into U.S. consumers' hands during the critical holiday-shopping season.
backed bargain consumers drop economy equity helped homes interest lower meant mortgage rates taking tap wealth
The thing that helped the economy so much was a drop in interest rates, which meant lower mortgage rates, which meant consumers have been able to tap the wealth in their homes by refinancing and taking equity out of their homes. With rates having backed up so sharply, refinancing is not such a bargain any more.
bank door interest leaves official open raise rates rather reserve sooner
It leaves open the door for the Reserve Bank to raise official interest rates sooner rather than later.
gradual improvement painfully rate
There is a very gradual improvement, but the rate of improvement is painfully slow.
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There's a perception that the economy is actually doing quite well, in particular the labor market. It's a fairly straightforward assumption the Fed would want to hike rates in March and perhaps in May. You might see bond yields go higher.
economy happened mention past rates seven
I think the back-up in rates should rate a mention -- it's the most significant thing that's happened to the economy in the past seven weeks.
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The Fed ultimately will be forced to cut rates further because we have had this ongoing issue of sub-par growth, disappointment on the jobs front and core inflation edging lower. People are talking about a terrific snap-back in the economy after the war, but I'm skeptical we're likely to see it.
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The markets are coming to understand that policymakers will be inclined to keep rates very low for an extended period -- the FOMC (Fed rate-setting committee) can still only dream that the economy will be strong enough in 2002 to justify a rate hike.
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The lesson from Australia is, as long as interest rates stay relatively low, the market will cool, not crash.
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The thing driving service prices is wage growth, and after two years of sub-par economic growth, we've got wages decelerating. If the Fed doesn't get the economy growing at an above-trend pace in the next couple of years, deflation will arise.
factors maintained means next number several
This number doesn't tell us much at all -- the seasonal factors are all over the shop. It only means something if it's maintained over the next several weeks.
skeptical time
I am skeptical that this time will be different.
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If we hadn't had a recession a year ago, and we were watching the fall in employment, a stalling manufacturing sector, falling bond yields and falling stock prices, many people would think we were entering a recession. There's an assumption that the recovery will continue and get stronger next year, when in fact it's possible the economy's tipping over again.
ball clear core far rise rolling toward
Obviously, a big rise in the core CPI would get the ball rolling toward another hike, but it's far from clear that will be the outcome.