Once again, events in Europe were the primary influence on mortgage rates last week. The Supreme Court’s ruling in favor of Obama’s health care plan had little impact on rates. Mixed US economic data and weak Treasury auction demand also caused little reaction. Mortgage rates ended the week a little lower.
For most of the week, expectations for action from the European Union (EU) Summit were very low, but EU officials surprised investors on Friday with the announcement of a plan to recapitalize European banks and to help reduce borrowing costs for Spain and Italy. Essentially, Germany agreed to an increased level of aid in return for the eventual creation of a single supervisor for all banks in the EU. Details of the plan have not yet been worked out. After the news, investors shifted to riskier assets, partially reversing actions earlier in the week.
While most of the attention was on Europe and the Supreme Court, the housing data released last week was encouraging. May New Home Sales rose 8% from April to the highest level since April 2010, when the homebuyer tax credit was about to expire. May Pending Home Sales rose 6% from April, also to the highest level since April 2010. Record low mortgage rates and high affordability levels are helping the housing market.
The biggest economic report this week will be the important Employment Data Report on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and Wage Inflation will be the most highly anticipated economic data of the month. Before the employment data, ISM Manufacturing and Construction Spending will be released on Monday. (today). Factory Orders will come out on Tuesday. ISM Services and ADP Employment will be released on Thursday. Mortgage Markets will be closed on Wednesday in observance of July Fourth.
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