Markets this week stood still, waiting for news and performances in the next week which may shake foundations. The 10-year T-note opened on Monday at 2.06% and today trades at 2.00% (June’s entire range: 2.13%-1.99%), mortgages motionless near 4.00%.

This week’s new load of US data from May was as nice and polite as could be. Orders for durable goods fell, but entirely because of Boeing’s troubles -- the remainder were positive and beat forecasts. Personal income rose .5%, spending by .4%, and core PCE inflation rose to 1.6% year-over-year.

Given the huge drop in mortgage rates in the last six months, housing is doing fine. Sales of new homes are off 3.7% year-over-year, but due to short supply mostly caused by scarcity of land. NAR’s survey of pending sales rose 1.1%.

There is nothing in that data to justify a cut in the Fed’s cost of money.

(Semi-correction: last week I chewed on Neal Kashkari for advocating a rate cut after the Fed’s last meeting but having failed to dissent at the meeting. Bad homework: Kashkari, Minneapolis Fed president is out of the voting rotation. Given the White House pressure on Powell, it was still unnecessary to buck the chair after the meeting. Last week I also said that St. Louis president Bullard’s dissent in favor of an immediate rate cut looked like an application for Powell’s job. Lo and behold, released this week the White House is considering Bullard for appointment as Fed governor.)

The reasons for a rate cut: insurance against a possible US slowdown, or to follow market rates’ global markdown, or a slowdown overseas, or a global slowdown from trade war, or shooting war with Iran. Until one or more of those goes sour, or the Fed cuts anyway, it’s not a good idea to expect mortgage rates to fall more -- mortgages are already way, way out front of events.

Next week the effect of all news on markets will be magnified by the holiday absence of big shots, out in the Hamptons kicking the sand castles of little people. On Monday we’ll get the manufacturing ISM survey, which may show the effects of tariffs on supply chains. Then on Wednesday the service sector ISM, not sensitive to tariffs but describing the pace of the economy, and on Friday the big one, employment data for June.

The G20 meeting is unfolding now, our president’s behavior unspeakable, so don’t speak of it. The world is doing its best to ignore him and just wait him out. China is nigh impossible to read, but its internal data suggests that it is pulling into a shell to protect against whatever tariff damage appears, meanwhile playing for time and will never agree to US demands -- not these, and not in public.

Iran is unquantifiable. Things in Afghanistan might have turned out better if we had googled a map of the place (200 miles from an ocean, supplied over the Khyber Pass, the size of AZ and NM combined and worse terrain, 25 million people who live to fight). Iran is four times the size of California, or Iraq, or France. Its 81 million people are double that of California, and its capital and population centers hundreds of miles from the Persian Gulf.

Independence Day is a great holiday. Maybe better even than the celebrations of winter solstice, the annual confirmation that the sun will not continue to sink south and disappear altogether. Our independence was not a revolution: the same people and cultures here were in power before and after. We fought to escape life as a Crown colony, and today might rename affair: Amerexit (nah, sounds like a credit card), or USexit (bad grammar), or Colonexit (unfortunate illness).

Independence Day is not an exit party, but a togetherness day. The only place on Earth where we are who we are, not who we were born, and equal under the law.

A record number of people watched the Democrats’ debate, especially the apolitical (my wife, both nights). The show was weird, like an alumni weekend at a small, liberal college. Too many candidates, and moderators -- who knew they were better candidates than the candidates. The low points: Harris and Booker playing the race card against a man who fought hard and unpopularly for civil rights in a Civil War slave state when Harris and Booker were 8- and 3-years-old. And too bad to watch these would-be chiefs try to flank each other on the left, nobody speaking to the need to work with the other side -- which of course the Republicans must do as well. The high point: a lot of bright, caring people, few with the electricity or gravitas to be elected, but good people.

The end of the Supreme Court term just before Independence Day has brought its own reminders. Most of us, maybe all of us once in a while wish the Court would act as parent, wisely settling disputes in our favor whether with judicial rigor or without. And just about everyone sometimes feels let down, even betrayed by the Court -- which has had its few epic mistakes. Today of course the left worries that the Court has been seized by the right, as the right used to worry about the left.

I don’t know how lost to rancor or background noise have been some of the decisions in the last few days. For example the Court’s refusal to allow Alabama’s abortion statute, or to allow a citizenship question in the census (not for now, not for the false reason given by the Commerce Department). The standout decision for me was a shock yesterday, Rucho v. Common Cause in which the majority found that the courts do not have a role in districting, not even to stop gerrymander.

The decision is here, worth a little of your time over the holiday (it changed my mind). Chief Justice Roberts wrote: “Our conclusion does not condone excessive partisan gerrymandering. We simply note that the avenue for reform established by the Framers, and used by Congress in the past, remains open. But we have no commission to allocate political power and influence in the absence of a constitutional directive or legal standards to guide us in the exercise of such authority.”
We do not have a national parent. We have us. Each other. All is up to us together.

Happy 4th of July!


The 10-year T-note in the last year, positively aching for an upward counter-move:

Nothing wrong here. 3.1% in the first quarter, 1.5% in the second, growth potential about 2%... everyone would like faster, but not forced:

The ECRI is unchanged in its most recent figuring, which includes the thought that the world is “de-globalizing” in some ways and not because of tariffs. See China, turning inward:

This chart from the Chicago Fed may be the worst graphic ever published anywhere, but it is the result of gazillion-factor tracking of the economy. We can see the soft patch last winter, and coming out of it: