Economic Roundup: Week of November 19, 2012

There was little market moving news for mortgage rates over the last week. Little apparent progress was seen regarding the US fiscal cliff or the debt troubles in Europe. Since it’s extremely difficult to estimate the impact of Hurricane Sandy, investors did not give much weight to the US economic data released last week. As a result, mortgage rates ended the week unchanged.

Investors are operating with a high degree of uncertainty these days. Many hoped that after the election political leaders would provide clear signs that a compromise could be reached to resolve the upcoming fiscal cliff. If no action is taken, a series of spending cuts and tax increases will occur at the end of the year, which likely will result in a sharp slowdown in US economic growth. In general, investors have reacted to the uncertainty by shifting from riskier assets such as stocks to safer assets like mortgage-backed securities (MBS). This has led to mortgage rates pushing lower over the last few weeks. If a political compromise is reached, expect this flight to safety to reverse, investors to sell bonds, and mortgage rates to go back up.

The situation in Europe is also a source of frustration for investors. It’s clear from the economic data that growth in the region is slowing, even in the stronger countries such as Germany. The big question is what actions will be taken to address the debt troubles. European officials remain divided about releasing additional aid to Greece. Spanish leaders have not decided whether they will ask for assistance from the European Union (EU) bailout programs. In short, while economic conditions continue to get worse, there has been little progress in the conflict between the troubled European countries which need help and the stronger countries which will have to pay the bill. No clear resolution seems in sight, so expect market volatility related to this area.

This week will be a light one for economic data. Existing Home Sales will be released today, Housing Starts on Tuesday, and Consumer Sentiment, Leading Indicators, and Jobless Claims all on Wednesday. Mortgage markets will be closed on Thursday and will close early on Friday in observance of Thanksgiving.

November 19, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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