Spain/Merkel/Mortgage rates

I guess still doing its due diligence in deciding whether to go hat in hand to the EU, the Spanish Deputy PM wants to know how much money the ECB is ready to spend on Spanish bonds in the secondary market. She said “To take decisions you need to have all the elements on the table.” Yields in Spain and Italy are higher after both sold short term debt. German and Italian consumer confidence and French business confidence were little changed m/o/m about as expected. Merkel had a good quote today according to BN when she repeated again that Germany will absolutely not agree to euro bonds as it would bring “fatally wrong incentives” and distract from the core problem of too much debt and not enough growth. She said, the “good fortune” of a united Europe “can’t lead to a false happiness where we look into each other’s eyes and smile without talking about the real problems. The more united we are, the more honest we have to be with each other.” In the US, mortgage rates continue to fall according to as the avg 30 rate went to 3.46% last night vs 3.48% the day before. Notwithstanding the Fed’s best attempts, the sustainability of the move lower will still depend on where long term treasury yields go from here.

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