Daily Commentary by Larry Baer: The greatest influence on the trend trajectory of mortgage interest rates this week will be Greek headlines.
In the face of social unrest and rioting over the weekend the Greek Parliament approved austerity measures that took the country one step closer to securing a bailout package that will help it avoid financial collapse. The next hurdle to be overcome is convincing Euro-zone finance ministers that the Greek government has the ability to reduce the country's budget by 325 million Euros this year.
The Greek political powers will have their chance when they meet with European Union and International Monetary Fund officials on Wednesday. If all goes well - by the end of the day on Wednesday -- Greece will have successfully staved-off a sovereign debt crisis by securing a $172 billion financial rescue package. If a firm "deal" is in place by February 15th - the immediate default risk for March will be much lower but global investors will likely choose to remain skeptical that the Greek default threat has passed entirely. Against this backdrop look for mortgage interest rates to move sideways to perhaps fractionally higher.
Should the Greek government fail in their efforts to secure a major financial rescue package -- a Greek bankruptcy will probably be confirmed no later than March 20th. The ramifications of this event will almost certainly send global investors scrambling for the relative safety of dollar denominated assets like Treasury debt obligations and mortgage-backed securities - a condition that will prove supportive of the prospects for steady to fractionally lower mortgage interest rates in your neighborhood.
The coming week's economic calendar will feature the release of the January Retail Sales figures on Tuesday followed by last month's Producer Price Index on Thursday and will conclude with the January Consumer Price Index on Friday. Retail Sales are expected to be pretty solid - but much of the gain is anticipated to be the result of price discounting - a condition that most economists believe will be confirmed by the very modest readings for the Producer and Consumer Price Indexes. If this assessment proves accurate, the upcoming macro-economic data should prove to be collectively mortgage interest rate neutral.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
