Market Looks Overseas For Direction

The markets are concerned about Greece and several other European countries as to whether they will default on their debt. The potential economic collapse of several European nations has investors worried that this may spread into a global issue. The good news to this story is that many investors are making the “flight to quality” (investing in US bonds) which has kept our rates at current levels with some bias to lower levels. European finance ministers are meeting today in order to come up with a viable solution for their debt crisis. If a viable solution is reached, look for rates to move higher as the demand for US bonds will move to a more normal trading range. The best thing to watch this week will be the DOW. Higher DOW = Higher Raters...Lower DOW=Lower Rates. Economic Calendar for the Week…. Tomorrow we will get a look at housing statistics, Industrial Production and the minutes from the January Fed meeting. Housing starts are projected to have risen by 4.13% in January however, building permits are expected to have fallen by 5%. Both Industrial production and utilization are expected to have risen slightly in January giving some hopes that we may actually be emerging out of the recession. I still believe we need to see several more months of consistent growth before we can wave the victory flag. The minutes to the January Federal Reserve meeting will be released tomorrow. I don’t expect any surprises here but if their minutes hint that they may feel that the economy is beginning to pick back up….look for rates to move marginally higher. Thursday and Friday will produce the “Biggies” of the week with the release of the Producer Price Index as well as the Consumer Price Index figures for January. The market is looking for a minimal increase of .1% in both the Producer Price Index and the Consumer Price Index. If actual numbers come in at or even below these projections, look for rates to move marginally lower. Overall, I expect rates to continue to move within a very narrow range this week. Homebuyers need to take advantage of these rates and sign contract before the tax credit expires!!!