The coming week doesn’t
offer much in the way of economic data for
mortgage investors to play off of as they make
decisions regarding the appropriate level for
interest rates.
Uncle Sam will reach his debt limit on Monday
and Congress is still a long way from reaching
agreement on authorizing an increase in
borrowing capacity. The Treasury Department
will set in motion a series of extraordinary
measures to keep the government’s lights turned
on and to make debt payments. The fancy
financial footwork will only keep the wolves from
the door for a limited time – probably no later than
early August by most estimates.
The political rhetoric from both sides of the
Congressional aisle will undoubtedly dominate
news headlines – but few doubt a budget deal will
be made and the debt ceiling will be raised well
before a major credit default by the U.S. occurs.
That’s the good news.
The bad news is that the longer the politicos play
“chicken” with the sovereign creditworthiness of
the nation – the more difficult it will be for
mortgage interest rates to move sideways to
fractionally lower.
