When the FOMC (Federal Open Market Committee) convened their fifth of eight annual meetings last Wednesday, they voted to leave the Fed Funds Rate (the rate at which banks lend money to each other overnight) unchanged at 0.000-0.250 percent.
Following the meeting, mortgage rates rose only to come retrace on Thursday and Friday, once again settling in near all time historic lows.
Mortgage Rates in the Week Ahead
This week market watchers will be keeping an eye on the events in Europe as they have done so for many, many months. There are a couple of points to consider on the European front. As countries like Greece get closer to resolving their issues, the downward pressure their crisis has put on mortgage rates will dissipate. On the other hand, should they fail in the terms of their austerity or bailout requirements, this could exert significant downward pressure on mortgage rates and signal future risk for other Eurozone countries, the Euro and even the future of the European Union. This means that as usual, Eurozone news and speculation may play a large role in what US mortgage rates do and can do so in a volatile way.
More specifically, market watchers will be watching the progress fo Spain’s banking bailout request and the EU Summit will begin on Friday, taking up the issues facing Europe and the current issues facing Greece, Italy and Spain.
US Economic Data
This week will see a lot of domestic economic data released such as GDP, Durable Goods, Jobless Claims and Pending Sales Index data. Since this data can give important insight into the health of the economy and employment, expect mortgage rates to move should these pieces of data come in significantly above or below expectations.
Supreme Court Ruling
Finally, the Supreme Court will be ruling on health care this week. It’s difficult to know how the market react and how any reaction might affect mortgage rates, so mark this event as possibly volatile.
Economic Calendar for Week of June 25, 2012
- Monday – New Home Sales
- Tuesday – Consumer Confidence, S&P Schiller HPI
- Wednesday – Durable Goods Orders, Pending Home Sales Index
- Thursday – GDP, Jobless Claims
- Friday – Personal Income and Outlays