News that Germany and France are leading a consortium of countries to bail out Greece is threatening the “flight-to-safety” trade which has helped mortgages rates remain low here in the US over the past week.  If details are published and appear credible I expect mortgage rates to increase by .125% or so on the news.

According to the Commerce Department personal incomes grew by a slower than expected pace last month.  Despite the slow growth of incomes Americans somehow managed to increase their consumption spending by a larger than expected clip.  Embedded in the same report is the Personal Consumption Expenditures price index which is the Fed’s favorite gauge of inflation.  The report showed that on a year over year basis inflation remains in check which is a good sign for mortgage rates.

Looking ahead for the week it is not a very busy week in terms of economic data until we get to Friday with the monthly jobs report.  At these levels its tough to imagine interest rates getting significantly better so we’re going to remain in a locking stance.

Current outlook: locking bias