Stat check: This further spike higher in interest rates today now has the 10 yr yield up just shy of 100 bps since Aug 26th and the 30 yr FNMA mortgage coupon up by 92 bps. We will likely see the average 30 yr mortgage rate above 5% tonight. Also, the CRB index is up 21% since Aug 26th. Some are saying that this shows QE2 is working. To that I say ha but the question goes back further than just when they started the program or when Bernanke hinted at it. For the first time in this whole multi year experiment on the part of the Fed, the bond market has taken over and has pushed back against the Fed’s goal and desire of keeping interest rates low whether due to a better economy, higher commodity prices and/or concern with debts and deficits.
