While millions of American’s are out shopping for door-buster specials this morning, perhaps they would be better served by shopping for a new mortgage for a refinance or purchase. Despite a slight tick higher today, mortgage rates still hover near all-time lows. News from Europe continues to dominate the markets and create uncertainty that keeps mortgage-backed securities popular with investors.
The European economic situation continues to deteriorate as bond yields have spiked across Europe. Both Italy and Germany held bond auctions this week that were poorly subscribed, suggesting that investors expect the value of the bonds to continue to drop. When Germany, the financial powerhouse of Europe is included in the problems, you can be certain that the situation is quite serious.
Unfortunately, the solutions for the European crisis won’t come easily. Most of the nations in the worst fiscal shape are calling for the development of so-called Euro-Bonds. These bonds could be used to refinance existing debt but are backed by all European nations. It is no surprise that the weak nations want the strong nations to participate in such a scheme. Likewise it is no surprise that the stronger nations (Germany in particular) are resisting, at least without some ability to directly impact the policies of their troubled neighbors.
With no economic data to be released today and many traders either sleeping off their gravy induced hangovers or seeking to score the deal of the century, trading will be extremely light today. Come Monday traders will be back in full force and looking to position their portfolios for the end of the year.
Next week is chock-full of economic data in the US. Home sales, consumer confidence, employment change and manufacturing reports are just some of the data that will impact markets. But when all is said and done, it may still be Europe that has the biggest effect on our markets and mortgage rates.
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