At the time I am writing this mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.

With the election over now the focus has turned to the approaching Fiscal Cliff and Europe's debt problem. All of the Bush tax cuts are set to expire at the end of year unless Democrats and Republicans can come to an agreement on which ones to extend and which ones to let expire. The closer we get to the deadline the more anxiety investors will get and the more volatile the market will become. The President is meeting with Republican leaders today to try to come to some sort of agreement. I think it is unlikely that they will come to an agreement this early on.

Europe is officially back in a recession as defined as two consecutive quarters of declining growth. This is not really news to anyone as we have been seeing weak economic reports coming out of the region all year, but now it is official. The only two counties that showed growth in Europe this last quarter is France and Germany, but it was not enough to offset the decline of the other countries.

Generally the bad news out Europe and the approaching Fiscal cliff would be good news for US interest rates, because investors would move their money into safe US bond investments. However this week we have not seen the flight to safety trade. I don't think interest rates will go up, but the decline seems to have stalled for the moment.