Housekeeping: ‘Mortgage Rate Update’ will be on vacation next week. The next update will be sent Monday, July 9th.
Mortgage rates are unchanged from Monday.
The third and final “significant event”, which I outlined in the June 14th ‘rate update’, get underway today in Brussels where European leaders are meeting to try and work through solutions to the ongoing debt crisis.
Prior to the summit German Chancellor Angela Merkel made it clear that Germany would not support an EU joint-bond plan unless other nations were willing to live within the fiscal controls laid out in a previous compact. Such a plan is the only credible solution that the markets would react to.
Should this European summit pass with no significant resolution, as is currently expected, mortgage rates will remain near all-time low levels.
The interest rate markets are shrugging off new economic data which shows that the number of workers filing for unemployment benefits fell last week. Meanwhile, the Commerce Department’s latest revision of 1st quarter GDP confirmed the economy grew at a 1.9% pace.
The US Treasury is set to auction $29 billion in 7-year notes later today. The markets are anticipating the sale to go off at the lowest yields in US history.
Current Outlook: neutral