Incline Village Home Loans, Incline Village Mortgages, Incline Village Mortgage Rates, and Incline Village Home Loan Rates:
Thursday’s bond market has opened in positive territory despite mixed economic news. The stock markets are fairly calm with the Dow up 15 points and the Nasdaq up 7 points. The bond market is currently up 6/32, which should improve this morning’s mortgage by approximately .125 of a discount point.
This morning had a fairly active schedule with two pieces of economic data and the second day of Fed Chairman Yellen’s semi-annual congressional testimony that was postponed from earlier this month. The first report was last week’s unemployment figures at 8:30 AM ET. They showed that 348,000 new claims for unemployment benefits were filed last week, up from the previous week’s revised total of 334,000 initial claims. Analysts were expecting little change in the number of first-time claims, so since the increase indicates a softening employment sector, we can consider the news favorable to the bond and mortgage markets. Unfortunately, this is only a weekly report and the morning’s second release was not so rate-friendly.
The Commerce Department said early this morning that January’s Durable Goods Orders fell 1.0% from December’s level, nearly matching forecasts of a 1.1% decline. The bad news came in a secondary reading that excludes orders for much more volatile and pricey transportation-related products such as new airplanes. That reading was predicted to show 0.3% decline but came in at up 1.1%. What this means is that if airplanes and similar products are excluded from the calculations, new orders for big-ticket products was stronger than many had thought. That is a sign of manufacturing sector strength, so we should consider the report negative for mortgage rates. However, the data is known to be quite volatile from month to month, so the markets have not had a significant reaction to the news.
Lastly, Fed Chairman Yellen is making her appearance in front of the Senate Banking Committee as day two of the Fed’s semi-annual testimony on the status of the economy and monetary policy. So far we haven’t heard anything too significant or surprising. The bond market is very close to where it was when she started at 10:00 AM ET. If we are to get something unexpected, it will come during the Q&A but I am not too concerned about this event.
As if we didn’t have enough already this morning, we also have today’s 7-year Treasury Note auction to watch. Yesterday’s 5-year Note sale went very well with most of the benchmarks we use to gauge investor demand showing high levels of interest. That helped spur bond strength yesterday afternoon and led to some lenders improving mortgage rates slightly. I suspect most lenders opted to wait for this morning’s data to reflect those gains though. If today’s 7-year Note auction draws a similar interest from investors, we could see another afternoon improvement in bond prices. Today’s securities are actually closer in term to mortgage bonds than yesterday’s, so a strong auction could help improve rates shortly after results are posted at 1:00 PM ET.
Tomorrow has two more pieces of economic data that are relevant to mortgage rates. The first is the first revision to the 4th Quarter GDP reading at 8:30 AM ET tomorrow morning. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts’ forecasts currently call for an annual rate of growth of 2.6%, down from the initial estimate of 3.2% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a downward revision would be good news for bonds and could lead to improvements in mortgage pricing tomorrow.
The week’s calendar closes with the release of the University of Michigan’s revision to their Index of Consumer Sentiment for February just before 10:00 AM ET tomorrow. Current forecasts show this index rising slightly from its preliminary estimate of 81.2. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but is not considered to be a major market mover. This means it will probably not have a significant impact on mortgage rates, especially with other important data being released tomorrow.