A relentless rise in Treasurys
This move is too fast, too furious and too unjustified by the facts.
Maybe it really is just too thin a market. Maybe we aren't used to U.S. Treasury bonds being traded as thinly as they are in the middle of this August. I don't know what else could be responsible for a move up in interest rates like this -- other than if the Federal Reserve were dumping Treasurys, instead of buying them.
It is a little counterintuitive. We've got no real loan growth to write home about. Sure, we had a red-hot housing market, but I think we will find that the market has cooled by now. Before, buyers didn't have to think about what rate they were locking in because all they ever got were lower rates. Now, they do have to think about it, and that's an impediment to a process that's not easy to begin with, especially when you see housing prices going up right before your very eyes.Still, though, you would think the volume of home sales would at least approximate half of what it was in 2006, before you saw this kind of actual demand moving up rates. The level is just not justified by the real economics we're seeing here.
As I search for reasons, aided by my colleague Matt Horween, I think that perhaps Europe is turning faster than we think, and that the demand for money worldwide might be increasing. Maybe that's why the euro is so strong, too. Perhaps the eurozone can grow 1% to 2%, and that will pull up the world's interest rates.
But I simply don't see any activity here that could justify this move. It's either artificial, or it is coming from overseas -- because no bank, not a single one I deal with, is saying there's newfound demand for credit.
The good news? If interest rates could go up this fast, they could go down this fast, and everything that's getting killed will come back to life. The bad news? I don't believe the 10-year bond will go back to 2.5%. Instead, I believe it will go to 2.75%, down from 2.86%. I think that could happen later this week, in fact, as the Fed has to be horrified by the relentless nature of this new move.
It's too fast, too furious and too unjustified by the facts.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust
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As far as interest rates go, they are all relative to your perspective. A move to 2.9% on the 10yr might seem huge compared to where it's been the last couple of years. But it's amazing how quickly people like Cramer lose sight of historical norms. From that perspective, interest rates SHOULD be rising fast and furious.
wouldn't you expect rates to rise when QE2/3/4 end?
so wouldn't treasuries rise ahead of the end of QE2/3/4?
Wal-Mart, Target, Walgreens, Kohls other Regional and a certain amount of Grocery stores; May represent the Economy, Skeedaddle.
But I don't think Penneys does anymore?
Home Depot, Lowes and maybe Regional Menards, may represent home improvement and housing.
Although they are a somewhat different Sector of retail.
"Lumber Liquidators LL P/E is crazy... I wonder if many of these did well because the investors were out there buying homes with cash and fixing up to rent. That is kind of tapering off now. Oh, that word taper...ha"
The problem here is-- that most of these guys got HUGE lines of credit through banks at nearly ZERO interest rates. Now the homes they bought and fixed up aren't selling because the prices have been kited too much. The condition know as-- asset rich, cash poor, is not good for America. It suggests we will see another repossession period and a glut of restored tract homes available. Again, without jobs that pay family-sustaining wages and have stability, the Housing Market will crash once more. Worse- all those too low to service mortgages will clog the system and cause banks to ask for bail-out money yet again.
Lumber Liquidators LL P/E is crazy... I wonder if many of these did well because the investors were out there buying homes with cash and fixing up to rent. That is kind of tapering off now. Oh, that word taper...ha
Nice headline !!!
Somebody really has Dick Cheney for a hero....Tell me I mis-read that, where are my glasses.??
GET OFF MY LAWN...
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