Global credit markets are locked in a state of suspended animation as investors anxiously await reassurance from European finance ministers that a viable plan has been developed to contain Greece's sovereign debt debacle. The great fear in the marketplace is that Greece's fiscal problems could spread rapidly through the global economy if a working anecdote is not developed soon. As long as this issue remains unresolved - capital will continue to flow to the relative safe-haven of Treasury debt obligations and agency eligible mortgage-backed securities.
That is certainly good news for the prospect of steady to perhaps fractionally lower mortgage interest rates. The bad news is that the capital currently pouring into dollar-denominated assets is "hot money" - subject to immediate deployment to riskier but higher yielding investment vehicles as soon as the European credit crisis shows signs of abating.
With nothing in the way of meaningful economic data to serve as a guide -- mortgage investors will likely look to the stock markets to provide directional cues for mortgage interest rates today. Higher stock prices will tend to nudge mortgage interest rates higher while lower stock prices will likely support steady to perhaps fractionally lower rates.
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