Industry News
Mortgage Industry News
Little Reaction to EU Summit
12/09/2011
With little economic data in the US this week, the focus was on Europe. Some investors were hoping that a more concrete plan to address the region’s issues would be announced during the week, but they were somewhat disappointed. As a result, relatively safer assets saw gains, and mortgage rates ended the week lower.
A highly anticipated EU summit left investors with mixed feelings and produced little reaction in financial markets. On Friday, European leaders announced that at least 23 of the 27 members of the European Union have agreed in principle to tighten their fiscal coordination and to limit budget deficits. The details, which will determine the effectiveness of the plan, are to be worked out in the future. In essence, investors viewed this news as only a small step forward.
What investors really would like to see is a major new aid program for the European countries with debt problems. The issue remains, though, that someone must pay for the aid, and the countries providing the funds understandably want to be reassured that the countries receiving the aid will demonstrate greater budgetary discipline. Investors expect that if European leaders eventually reach an enforceable agreement, then the European Central Bank (ECB) or another institution will provide additional aid. It appears that the European debt issue will continue to be a major influence on US financial markets for quite a while.
