No, our economy is not slowing. It's simply possible that interest rates did overshoot where we thought they would go. It is not foreordained that once rates start climbing all they will do is keep climbing. And it is certainly not very rigorous to say "rates are down, did we misjudge how strong the economy is?"
One of the nuttiest things that has been happening this year is a belief that every time rates move it is based in fact and not in emotion or manipulation.
Yet today I heard that the Baltic is slowing, oil's going down and a bunch of retailers said things are weakening so it is reasonable to think that the interest rates should come down.
So, in the interest of giving you a common-sense wake-up let me tell you what I see:
1. If you are in Europe and you think that the dollar is going to be stronger versus the euro -- a reasonable assumption given that Europe's had mixed data -- then you should take your euros buy dollars and then buy U.S. bonds because they are such a better deal than anything that's denominated in euros. ANYTHING.
2. There can be short-covering in bonds. They've been a great short. Phenomenal even. So maybe the shorts, who are substantial, decided to take profits and ring the register.
3. Even if the economy is strong, 3% can be a decent rate if you think that a slowdown in the next year could occur.
Finally, let's stop thinking that the bond market is all that brilliant on a given day's basis. I think bond buyers and sellers, on the whole, are smarter than stock investors. But not necessarily on a minute-to-minute basis.
That's why I would be willing to buy stocks like Citigroup (C) and JPMorgan Chase (JPM) and the now pathetic, always dropping Goldman Sachs (GS) (just kidding but it has been terrible even as, once again, Lloyd Blankfein is leaving.).
No one is saying the Fed won't still raise rates. These banks will crush it when they do.
Great place to be.