The much touted $2.1 trillion in spending cuts spread over 10-years contained in today’s legislation represents a mere drop in the bucket compared to our national deficit of $14.3 trillion. Credit rating agencies were looking for $4 trillion in spending cuts in order to confirm America’s AAA credit rating – so there is still a chance that our national credit score may fall. If such a scenario were to become reality-- the upward pressure on interest rates of every kind will likely ratchet up noticeably. More on this story as it develops.
Earlier today the Commerce Department said June Personal Incomes rose 0.1% while spending slumped 0.2% -- posting its first decline since September 2009. The core personal expenditure index, a measure of consumer inflation which is closely watched by the Fed, rose a very modest 0.1% after gaining 0.2% the prior month. A soft inflation reading and a dip in consumer spending is viewed by investors as mortgage interest rate friendly news.
THE MARKET IS ALWAYS RIGHT! … YOU AND I ARE SOME OF THE TIME
