Commentary: Watching and waiting.
Many analysts believe lawmakers may reach a deal to raise the national debt ceiling as well as approve legislation providing for a significant package of government deficit spending cuts over the weekend.
If congressional authorization for the expansion of the country's debt ceiling is granted -- together with spending cuts of $2 trillion or more -- look for mortgage interest rates to rally strongly next week.
On the other hand -- an expansion of the nation's credit limits without major government spending reform -- will likely result in the loss of our AAA credit rating - a condition that within a couple of weeks of its occurrence has the potential to send mortgage interest rates notably higher. (There will likely be a little time lag between the actual event (should it occur) and the impact on your rate sheets while the global marketplace deals with the shock.)
The details of any agreement from Congress and the Administration are still nothing more than sheer speculation at this point - and it's the details that will influence the forward looking trend trajectory of mortgage interest rates the most. Until this veil of uncertainty is lifted - look for mortgage interest rates to move back and forth in a very tight trading range (for the week ending today - the price of the Fannie Mae 4.0% 30-year mortgage-backed security has traded within a very slight +/- 37.5 basis-point range of last Friday's close).
The coming week's macro-economic data will be completely overshadowed by financial decisions forthcoming from Congress and the Administration. But just so you know -- here is a quick look at the event calendar. June New Home Sales and July Consumer Confidence figures will be released on Tuesday. Wednesday will feature the June Durable Goods Orders numbers. The initial jobless claims number for the week ended July 23rd and the June Pending Home Sales data will hit the newswires on Thursday and the week will round out with the government's revised quesstimate of second-quarter GDP together with the Employment Cost Index stats for the second quarter -- both due on Friday. From Tuesday through Thursday Uncle Sam will be in the credit markets looking to sell a total of $99 billion worth 2-, 5- and 7-year Treasury notes.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
