This week is ending with treasuries retreating slightly from their week long rise with the 10 year T-bill moving from a low of 1.63% to a high Thursday of 1.84%. Late Friday the 10 year was down to 1.81%. This is basically a .25% rise in the past week. Mortgage rates obediently followed rising from 3.5% to 3.75% on the 30 year fixed,
After a slew of very positive, on the surface, reports early in the week, the two major reports late in the week, Housing starts and the Jobless Claims came in right on consensus. In this case, consensus means where predicted, not strong. A possible downer from the end of the week is that Consumer Sentiment is still weak. Consumers just aren’t buying into the “All-is-Getting-Better” philosophy. That might be partially from all the news regarding the drought and the probable future rise in food costs. It may also be that they are just seeing the realities of life out there. Historically, the consumers and their sentiment have been pretty sharp.
Europe and China have been quiet this week and the markets are taking this as “no news as good news”. I’m not sure I agree. No news is just that. Nothing appears to have been done to solve the issues.
Just a thought for the weekend:
With the drought taking a serious toll on the nation’s corn crop; with corn being one of the world’s major food ingredients; and a number of states, Colorado being one, requiring an ethanol gasoline mix year round; combined with the increasing documentation that ethanol reduces gas mileage by 10-20%; isn’t as energy efficient as we initially thought (it takes more energy to make the corn based ethanol than it produces); and it seems to be questionable about the pollution savings after the pollution (air and water) created from producing the ethanol is factored in; shouldn’t we consider a temporary lifting of the ethanol requirement until we’re through the drought to help keep food costs down? And during that time re-evaluate our facts and the results? Just because a law is on the books doesn’t mean it has to stay. That’s why it's still illegal to leave a horse not tied up on the streets of Cheyenne. Just a thought.
Have a great weekend.