There was little market moving news for mortgage rates this week. Little apparent progress was seen regarding the US fiscal cliff or the debt troubles in Europe. Since it’s extremely difficult to estimate the impact of Hurricane Sandy, investors did not give much weight to the US economic data released this week. As a result, mortgage rates ended the week with just a small change.

Investors are operating with a high degree of uncertainty these days. Many hoped that after the election political leaders would provide clear signs that a compromise could be reached to resolve the upcoming fiscal cliff. If no action is taken, a series of spending cuts and tax increases will occur at the end of the year, which likely would result in a sharp slowdown in US economic growth. In general, investors have reacted to the uncertainty by shifting from riskier assets such as stocks to safer assets, including mortgage-backed securities (MBS). If a deal is reached, this flight to safety may reverse, at least to some degree.

The situation in Europe is also a source of frustration for investors. It’s clear from the economic data that growth in the region is slowing, even in the stronger countries such as Germany. The big question is what actions will be taken to address the debt troubles. European officials remain divided about releasing additional aid to Greece. Spanish leaders have not decided whether they will ask for assistance from the European Union (EU) bailout programs. In short, while economic conditions continue to get worse, there has been little progress in the conflict between the troubled countries which need help and the stronger countries which will have to pay the bill.

Thanksgiving week will be a light one for economic data. Existing Home Sales will be released on Monday. Housing Starts will come out on Tuesday. Consumer Sentiment, Leading Indicators, and Jobless Claims are scheduled for Wednesday. Mortgage markets will be closed on Thursday and will close early on Friday in observance of Thanksgiving.

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