Market recap for week ending 7/20/2012
This week we did not see much movement in mortgage interest rates. As of this morning rates are slightly lower than they were Monday morning, but only by a thin margin. As usual the US markets have been watching Europe’s debt problem and monitoring the Federal Reserve(FED) for any conformation of another quantitative easing move. Any bad news out of Europe is generally good news for interest rates and any confirmation from the FED of another easing program is also be good for rates.
The following were some noteworthy economic news this week that influenced mortgage rates :
Tuesday and Wednesday Ben Bernanke our Chief of the FED testified in front of Congress. Everyone was waiting to see if Bernanke would give us any confirmation of another easing move, but as usual he has mastered saying a lot without really saying anything.
On Wednesday the FED released their Beige book which is a survey of business conditions in 12 U.S. districts. The report said that the US economy expanded at a modest to moderate pace in June and early July, as retail sales and manufacturing cooled in some regions. Once again any negative economic new is generally good news for rates and will put more pressure on the FED to do another easing move.
In Europe, Spain’s Treasury bonds rates kept on climbing this week which means they now need a bailout more than ever. The rest of Europe is still trying to figure out how to deliver this bailout. Germany which is the largest economy in Europe and ultimately calls the shots wants very strict terms on the bailout. The debt problem in Europe has been going on for a long time now and there is still no solid plan to resolve it. As long the debt mess remains unresolved investors will continue to move their money to save havens such as US Treasuries thus driving down US mortgage rates.
Since there is a political gridlock in Washington and not much is getting done many politicians are looking to the FED to take action, so I think there will be another easing move but not until after the July employment figures come out in August. I don’t think another easing move will have much effect on the economy, but at least it will keep mortgage rates down.
Tags: Europe debt crisis, market preview, mortgage rates outlook, Spanish bailout