Lake Tahoe Mortgage Rates and Lake Tahoe Home Loan Rates:
Wednesday’s bond market has opened in negative territory following stronger than expected economic data and early stock strength. The same economic data is helping to boost stocks this morning, pushing the Dow higher by 113 points while the Nasdaq has gained 19 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point over yesterday’s morning pricing.
There were two pieces of economic data posted this morning but the key report came at 8:30 AM when we got the initial reading of the 2nd Quarter Gross Domestic Product (GDP). It showed that the economy grew at an annual rate of 1.7% during the second quarter, exceeding forecasts of a 1.1% increase. This means the economy was stronger during the quarter, making the data negative for the bond market and mortgage rates. Since this report is considered to be the benchmark reading for economic activity and is highly important to the markets, it has caused the bond market to go into selling mode.
The second report of the day was 2nd quarter Employee Productivity and Costs data that revealed a 0.5% increase in worker productivity. This was just a bit higher than analysts were expecting, theoretically making it good news for mortgage rates. However, this was a minor variance in a moderately important report that was released at the same time as the GDP reading, so it has had little impact on this morning’s trading or mortgage pricing.
We also have this afternoon’s adjournment of another FOMC meeting that will likely lead to plenty of volatility in the financial and mortgage markets later today. This is not a meeting that will be followed by a press conference with Chairman Bernanke and is expected to yield no change to key interest rates. Although, there is a lot of speculation that the post meeting statement may clarify the Fed’s position or estimation of when they will begin to slow their current $85 billion monthly bond buying program (QE3). This topic has caused a firestorm in the markets multiple times over the past two months, and not always logically. Therefore, it is difficult to make a prediction of what to expect. Theoretically, we would like to hear something that would hint the Fed will not start tapering their purchases in September as many analysts currently believe.
One would think that since the current consensus has September when the Fed will start, hearing it again would not have a negative impact on the bond market. Unfortunately, logic and history does not seem to be a good indicator on how the markets will react to such news recently. That leaves us little to base a prediction on, other than to hold our breath and hope sanity quickly returns to the markets. The meeting will adjourn at 2:00 PM ET, so the fun should begin mid-afternoon. Look for an update to this report shortly after the markets have an opportunity to react to what is said. There is important economic data set for release tomorrow (ISM manufacturing index), but that will be covered in today’s afternoon revision.