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By G. Steven Bray
Mortgage rates jumped to start the week when markets thought Europe was having a kumbayah moment. But the momentum faded as markets realized that the happy headlines were masking serious differences between Greece and EU officials. It didn’t hurt that the Federal Reserve meeting minutes, released today, reinforced what the Fed said in Jan, that it’s concerned about events overseas and falling inflation.
But back to Europe. The EU has given Greece ’til the end of the week to agree to an extension of its current bailout agreement. Greece’s new government will lose face if it agrees, but it may flush the Grecian economy if it doesn’t agree. Something has to give. Some analysts think the differences between the two are more a matter of semantics and expect an extension soon.
If they agree to an extension, it’s likely to keep some upward pressure on rates short term. However, an extension would only delay dealing with Greece’s insolvency and, thus, would change little about the current reality. That would leave rates adrift again, waiting for the next big headline.
And that may come next week with Fed head Janet Yellen’s semi-annual testimony before Congress.
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