Expect for some market volatility this week, as European debt problems come back into focus with an important Thursday vote in Greece. The Greece parliament will vote on another round of austerity measures, including tax increase, pension cuts, and a measure that would effectively eliminate the minimum wage for millions of workers.
Currently, Greece relies on the European Union and the International Monetary Fund for cash support to keep the government meeting payroll. In return, the country has used “austerity measures” to curb spending and raise income in an attempt to get out of its unsustainable debt and spending habits. Leading up to the vote this Wednesday and Thursday, Greek workers have called for a general strike, which will virtually shut the country down. Greek politicians will vote amidst this vocal discontent.
The US stock market has responded to this debt crisis, along with other Eurozone country debt problems (Spain, for example), by rising and falling with news. The market typically rises on news of a comprehensive solution to Eurozone debt, and falls when such a solution runs into difficulty.
Most recently, Europe took strides toward a potential solution, only to be temporarily foiled by Slovakia. Sixteen of the 17 European countries voted to expand the euro rescue fund to $590 billion, which would be used as support in the debt crisis. Slovakia did not get the votes, and the plan would need to be approved unanimously, and so it has stalled. Stay tuned to see the next step.
Closer to home, we will have three important housing reports released this week: October homebuilder confidence (Tuesday), September housing starts (Wednesday), and September existing home sales (Thursday).
Last week, the Dow finished up over 400 points, extending two-week gains. The strength of the market brought interest rates up off of all-time record lows. The national average of the 30-year fixed rate, which had dropped below 4 percent for the first time ever, moved back up to 4.12. Central Coast Lending offers rates starting with a low of 3.75 percent (3.903 percent APR) for the 30-year fixed and 3.000 percent (3.522 percent APR) for the 15-year fixed.