As expected the US economy is continuing to show signs of strength this week with the first several of many economic reports clearly indicating progress. Unfortunately, the situation in Europe is still one of uncertainty as the new leaders of Greece and Italy get to work trying to solve their respective debt issues. As it impacts mortgage rates the news is generally positive. With just a heating economy in the US we would likely see higher current mortgage rates, yet the cold water of the European crisis is keeping rates stable.
Inflation figures for the producers of goods came in lower than expected for the second consecutive month. Manufacturing data for the New York Federal Reserve bank region for the past month was significantly higher than last month. Finally, retail sales figures for last month, one of the most important gauges of our economy’s health were higher than expected and showed particular strength outside of the automotive sector. This is particularly encouraging since it indicates that the improved spending activity of American consumers is across the board rather than simply suggesting replacement of older vehicles due to pent up demand.
Contagion is an ugly word whether talking about a disease or financial instability of sovereign nations. Unfortunately it is a word being used consistently to describe the debt crisis in Europe today. Signs are everywhere that investors are demanding more return to invest in the debt issuances of all countries in the Eurozone. As would be expected, yields in Greece and Italy continue to rise to levels that are close to repayable. But far more worrisome is the fact that bond yields in Spain, France and even Germany have begun to rise as well. Analysts and investors need to see real progress in Greece and Italy and more details about how the Eurozone’s rescue fund will be utilized to combat the spreading problem.
Tomorrow more US data that is expected to continue the evidence of economic strength will be released. But once again it will compete with little actual news but likely several more negative prognostications from Europe.
Total Mortgage consistently offers some of the lowest current mortgage rates in the country.
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