As the serious business of drilling down into the essence of yesterday's much heralded euro-zone debt deal gets underway the euphoria that drove a sharp rally in global stock prices and bounced mortgage interest rates higher is slowly beginning to give way to disillusionment as it becomes increasingly evident a convincing fiscal and political solution to the European crisis has yet to be developed.


Against this backdrop stock markets are growing exceptionally vulnerable to a November slide - a condition almost certain to support the prospects for steady to perhaps fractionally lower mortgage interest rates!!



In other news of the day - according to Commerce Department figures sluggish growth in consumer income lead households to dip into savings to increase their spending, a condition casting doubt on the durability of the third-quarter economic growth spurt and further eroding expectations for accelerating corporate earnings for the fourth-quarter.



With consumer income edging up a very thin 0.1% last month, the 0.6% increase in spending obviously came at the expense of savings - a "burn rate" that is not sustainable for an extended period of time. The saving rate (the percentage of disposable income socked away) fell to 3.6%, the slowest since December 2007, from 4.1% in August. The bright spot of this report was found in the core personal consumption expenditure component -- the Fed's favorite measure of inflation at the consumer level -- which showed no overall change last month.



The two major items on the coming week's calendar are the Federal Open Market Committee meeting on Wednesday, November 2nd -- and Friday's scheduled release of the October Nonfarm Payroll figures. Mortgage investors currently expect both events to be mortgage interest rate neutral.