Daily Commentary: The
Greek elections have come and gone.
The results of yesterday's parliamentary
voting have temporarily defused expectations of an imminent exit from the
euro-zone by Greece. But all is not rosy. A large number of analysts and other global
credit market participants appear to be firmly convinced Greece
has simply survived to fail another day.
Many observers believe there is a three-out-of-four chance that Greece
suffers a major sovereign debt collapse and leaves the single-currency union
within the next twelve months. After all
the pre-election hype nothing much has really changed - leaving the mortgage
interest rate friendly rush of capital out of Europe and into the relative
safe-haven of U.S. dollar denominated assets like Treasury debt obligations and
mortgage-backed securities intact.
Investors are now focused on the Federal
Reserve's upcoming two-day monetary policy meeting scheduled to run from
Tuesday through midday Wednesday. The
Fed is broadly expected to indicate that it will take additional concrete
action to stimulate the struggling economy.
The design and magnitude of the Fed's action is the subject of debate in
almost every corner of the credit markets.
In the unlikely event central bankers
announce the launch of another round of mortgage-backed security purchases as
part of a new Quantitative Easing stimulus program (QE3)
-- mortgage interest rates may creep fractionally lower from current
levels. If on the other hand, the Fed
chooses to do nothing more than extend their existing "Operation
Twist" beyond its current expiration date of June 29th - the
impact of Wednesday's Fed meeting on the trend trajectory of mortgage interest
rates will be much less pronounced.
Other items on this weeks calendar include
Tuesday's June Housing Starts and Building Permit figures, Thursday's weekly
jobless claims report and the June Existing Home Sales numbers also scheduled
to released on Wednesday.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
