U.S. mortgage rates spike higher

Home loan rates rose sharply over the past week amid inflation fears, a rebound in stocks and Treasury yields, and tighter credit standards. The 30-year fixed-rate mortgage rose to 6.63% for the week ended July 24 from 6.26% a week ago, said Freddie Mac. It's the 8th straight week over 6%. The 15-year fixed-rate mortgage rose 40 basis points to 6.18%. The 5-year Treasury-indexed adjustable-rate mortgage jumped to 6.18%, while the 1-year ARM was up to 5.49%.

German morale falls to 3-yr. low

The business climate index in Europe's No. 1 economy fell to 97.5 from June's 101.2, dragged down by the strong euro, high oil prices and tighter borrowing conditions, Ifo said. It was the lowest level since '05 and the biggest drop since 9/11. German factory orders have fallen for six straight months, and the gov't has already said that its economy likely contracted "considerably" in Q2.

Euro zone has gloomy outlook

The outlook in the 15-nation bloc is bleak, with manufacturing and service sector activity declining, according to the RBS/Markit survey of about 5,000 European firms. Spain's woes continued, as unemployment rose to its highest in 3 years. In addition to Germany's Ifo survey, French and Italian business confidence also hit multiyear lows. Denmark's consumer confidence tumbled to a 16-year low.

U.K. retail sales fell 3.9% in June after May's upwardly revised 3.6% gain, the Office for National Statistics said. It was the sharpest drop since records began in '86. Annual growth slumped to 2.2% from 7.9%. Japanese exports to the U.S. and EU both fell, as did exports to other Asian nations. There are growing concerns that domestic spending will not be able to buoy Japan's economy. The Fed and China's central bank should raise rates to curb inflation, European G-7 sources have told Reuters, but concede they're unlikely to get their wish. COMING UP FRIDAY

Durable orders for June, 8:30 a.m. EDT (forecast: -0.3%). New home sales for June, 10 a.m. EDT (forecast: 505,000).

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