Last week was a truly chaotic week for financial markets. With the S&P downgrade of US debt to start the week, traders, analysts, and everyone involved in the financial world prepared themselves for a wild week. The US Federal Reserve released its policy announcement, promising to keep rates low for the next two years. In Europe, concerns exploded that Spain and Italy would soon be in financial crises, and as the week ended, France was added to the list. Stock markets around the world bucked up and down, and by the end of the week, one thing was fairly clear. Downgraded US Treasuries are still seen as one of the safest, most-secure places to park your cash in times of trouble. Mortgage rates ended the week lower again, with concerns that the US economy remains weak. While there are many things around the globe that could influence US mortgage rates again, we may see the US economy as the primary source guiding interest rates. If we see signs that the economy is improving, rates are likely to move upward, but signs of weakness may push rates further downward.
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