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Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 27, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Wednesday’s bond market has opened in negative territory following stronger than expected economic data. The stock markets are showing minor gains during early trading with the Dow up 26 points and the Nasdaq up 15 points. The bond market is currently down11/32, which push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

There were four pieces of economic data released this morning. The first was at 8:30 AM ET and was the most important report of the week. That is when the Commerce Department posted October’s Durable Goods Orders, revealing a 2.0% decline in new orders for big-ticket products. Since analysts were expecting to see a 2.2% decline in orders and this data is known to be volatile from month to month, the results weren’t anything to be concerned with or overly happy about. The report does indicate manufacturing sector weakness but showed no significant surprises. Therefore, we should consider the data to be neutral for the bond market and mortgage rates.

The Labor Department announced early this morning that 316,000 new claims for unemployment benefits were filed last week. That was a decline from the previous week’s revised total of 326,000. Because analysts were expecting to see an increase in initial claims, indicating employment sector weakness, the data is bad news for mortgage rates. Declining claims for benefits is a sign of strength in the sector, so bond traders prefer to see rising claims.

The week’s final two reports were released late this morning. The University of Michigan released their revised Index of Consumer Sentiment for November just before 10:00 AM ET. It showed a reading of 75.1 that exceeded forecasts and indicates that surveyed consumers felt better about their own financial and employment situations than many had thought. Forecasts were calling for a reading of 73.0 and the higher the reading, the more likely consumers are going to make a large purchase in the near future. That fuels economic growth and makes the data negative for the bond and mortgage markets.

At 10:00 AM ET, the Conference Board closed the week’s economic calendar with their Leading Economic Indicators (LEI) for October. It came in with a 0.2% increase, exceeding forecasts of a 0.1% decline. This index attempts to predict economic growth over the next three to six months. While this is also only a minor report, it was the third report of the morning that gave us results that were clearly not favorable for mortgage rates. That has helped push bond prices to their lowest levels of the morning and created this morning’s increase in mortgage rates.

Today also has the 7-year Treasury Note auction that could affect bond trading and mortgage rates if it is met with a strong or obviously weak demand from investors. Results will be posted at 11:30 AM ET, so any reaction will come during early afternoon trading. Yesterday’s 5-year Note sale drew a decent level of investor interest, giving us something to be optimistic about in today’s auction. Today’s securities are actually closer in term to mortgage bonds than yesterday’s 5-year Notes, so a high level of interest today should help boost bond prices and possibly improve mortgage rates later today. On the other hand, a weaker demand than yesterday’s auction could lead to a minor intra-day increase in rates.

The financial and mortgage markets will be closed tomorrow for the Thanksgiving Day holiday. There are no early closings scheduled for today, but I would not be surprised to see thinner trading as the afternoon progresses due to traders getting a head start on the holiday. The markets will be open for trading Friday, although it will be a shortened day and it has no relevant economic data scheduled.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 25, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Monday’s bond market initially opened down slightly but has since moved into positive ground. The stock markets are relatively flat with the Dow up 12 points and the Nasdaq nearly unchanged from Friday’s close. The bond market is currently up 5/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Friday’s morning pricing.

There is nothing scheduled today that is of relevance to mortgage rates. Look for the stock markets to drive bond trading and mortgage rate movement. The weekend deal struck with Iran initially looked like it would play a role in this morning’s trading, but the early stock gains and bond weakness have quickly evaporated. If the major stock indexes continue to move lower today, we could see bonds strengthen and lenders slightly improve mortgage rates. On the other hand, if pre-market and initial gains return to stocks later today, we could see a small intra-day upward revision to mortgage pricing.

This holiday-shortened week brings us the release of six relevant economic reports for the markets to digest in addition to a couple of Treasury auctions that have the potential to affect rates. The week’s mortgage-related events start early tomorrow morning when September and October’s Housing Starts reports are posted. September’s data, originally set for release last month, was delayed due to the government shutdown, so we are getting both months tomorrow. This data gives us an indication of housing sector strength, but usually does not have a noticeable impact on mortgage rates. I don’t expect these to be any different unless they vary greatly from analysts’ forecasts. Both months are expected to show increases in starts of new homes, meaning the new home portion of the housing sector strengthened during September and October. Good news for the bond and mortgage markets would be sizable declines in the data, particularly in October.

November’s Consumer Confidence Index (CCI) will be released late tomorrow morning by the Conference Board, who is a New York-based business research group and not a governmental agency. The CCI gives us a measurement of consumer willingness to spend. If a consumer’s confidence in their own financial and employment situation is strengthening, analysts believe that they are more apt to make larger purchases, fueling economic growth. This is important because consumer spending makes up over two-thirds of the U.S. economy and makes long-term securities such as mortgage-related bonds less attractive to investors. Analysts are expecting to see a small increase in confidence from last month’s level, meaning surveyed consumers were a little more optimistic about their own financial situations this month than they were last month. A weaker reading than the 72.4 that is expected would be good news for mortgage rates, while a stronger reading could push mortgage rates higher Tu! esday.

Wednesday has the remaining three economic reports that we need to be concerned with. October’s Durable Goods Orders from the Commerce Department, the revised November reading to the University of Michigan’s Index of Consumer Sentiment and the Conference Board’s Leading Economic Indicators (LEI) for October are all set for release Wednesday.

In addition to those economic releases, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates tomorrow and Wednesday. There will be an auction of 5-year Treasury Notes tomorrow and 7-year Notes on Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. However, strong investor demand usually make bonds more attractive to investors and brings more funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.

Overall, I am expecting Wednesday to be the busiest day for the bond market and mortgage rates with three of the week’s reports scheduled, including the most important one (Durable Goods), along with the 7-year Note auction. Friday will likely be the calmest day of the week as many traders will be home for the long weekend rather than in the office working. I am still closely watching the benchmark 10-year Treasury Note yield for mortgage rate direction. I think we need it to move below 2.70% before we can expect to see a noticeable downward move in mortgage pricing. It currently stands at 2.73%. If the yield does not break below that level, I believe we will see it move higher, leading to higher mortgage rates.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 21, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Thursday’s bond market has opened in negative territory, extending yesterday’s late selling. The stock markets are helping pressure bonds with early gains of 66 points in the Dow and 27 points in the Nasdaq. The bond market is currently down 9/32, which should push this morning’s mortgage rates higher by approximately .500 – .625 of a discount point if comparing to Wednesday’s morning pricing. Just how much of an increase made this morning depends on how much of an upward revision your lender made yesterday afternoon.

Yesterday’s afternoon selling was fueled mostly by the release of the minutes from last month’s FOMC meeting. Those minutes indicated a possible shift in when the Fed may start tapering or slowing their current monthly bond purchases. There has been plenty of talk and predictions on that subject since early summer, but until yesterday it seemed the Fed was content with the $85 billion a month in purchases until the employment sector gained much more momentum (particularly a national unemployment rate of 6.5%). The minutes revealed some discussion about scenarios in which a reduction in purchases was made before their previously stated economic thresholds were met. That caused concern in the bond market because the Fed is buying long-term government and mortgage-backed securities. The result was an intra-day upward revision to mortgage rates from most lenders during afternoon trading.

There were two pieces of economic data released this morning that carry the potential to influence mortgage rates. The more important of the two was October’s Producer Price Index (PPI) at 8:30 AM ET. It revealed a decline of 0.2% in the overall reading and a 0.2% increase in the core data. Analysts were expecting to see the decline in the overall reading, but the core reading was forecasted at 0.1%. The data hints that inflationary pressures remain subdued at the manufacturing sector of the economy. However, since the core data excludes more volatile food and energy prices, it draws more attention than the overall reading. And because rising inflation makes bonds less appealing to investors, we should consider the data slightly negative for the bond market and mortgage rates.

The Labor Department also gave us last week’s unemployment figures early this morning, announcing that 323,000 new claims for unemployment benefits were filed last week. This was lower than expected and a fairly sizable decline from the previous week’s revised total of 344,000 initial claims. In other words, the employment sector appears to have strengthened a little more last week than many analysts had thought, making the data negative for the bond and mortgage markets.

Tomorrow doesn’t have any relevant economic data or other events scheduled that are likely to affect mortgage pricing. We still could see more movement in rates though, especially if stocks make a noticeable move higher. As mentioned several times recently, since the yield on the benchmark 10-year Treasury Note was unable to stay below 2.70%, I believed we were much more likely to see it move higher in the immediate future. That happened yesterday and unfortunately, until it gets close to 2.92% that risk will likely remain (currently 2.82%).

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 20, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Wednesday’s bond market initially opened fairly flat following the release of economic data that gave us mixed readings but has since moved into positive ground. The stock markets are showing minor gains with the Dow up 26 points and the Nasdaq up 13 points. The bond market is currently up 4/32, but due to weakness in trading late yesterday, we will likely see little change in this morning’s mortgage rates if comparing to Tuesday’s morning pricing.

This morning had three economic reports posted that tend to influence mortgage rates, with two of them considered to be highly important. The first came from the Commerce Department, who reported early this morning that retail-level sales rose 0.4% last month. This exceeded forecasts of a 0.1% increase, indicating consumers spent more in October than many analysts had predicted. Even a secondary reading that excludes more volatile and higher priced auto sales was stronger than thought (+0.2% vs +0.1%). That makes the data negative for the bond market and mortgage rates because consumer spending makes up over two-thirds of the U.S. economy. Stronger levels of spending fuels economic growth that makes long-term securities, such as mortgage-related bonds, less attractive to investors.

Next was October’s Consumer Price Index (CPI) from the Labor Department, also a key piece of data at 8:30 AM ET. They announced that the overall CPI reading fell 0.1% last month while the more important core data that excludes volatile food and energy prices rose 0.1%. Both readings were slightly lower than what analysts were expecting, meaning inflationary pressures at the consumer level of the economy remain subdued and weaker than predicted. Since inflation erodes the value of a bond’s future fixed interest payments, it is a significant problem for long-term securities. Accordingly, the bond market tends to react positively to signs of weak inflation. That is the case today, however, it more or less offset the negative news from the sales data and prevented a positive open in bonds.

The National Association of Realtors completed this morning’s relevant releases with their Existing Home Sales report at 10:00 AM ET. It revealed a decline in home resales of 3.2%, indicating a softening housing sector last month. This was a larger decline than was expected, making the data favorable for the bond and mortgage markets.

We have more to come this afternoon with the release of the minutes from last month’s FOMC meeting. Traders will be looking for any indication of the Fed’s next move regarding monetary policy or potential tapering of their current bond purchases. They will be released at 2:00 PM ET, so any reaction will come during afternoon trading. This release is one of those that may cause some volatility in the markets after they are posted, or could be a non-factor. If they show anything surprising, we may see some movement in rates later today.

Tomorrow has two pieces of relevant economic data but one is much more important than the other. October’s Producer Price Index (PPI) will be released at 8:30 AM ET and is the more important of the two reports. This index is similar to today’s CPI, except it measures inflationary pressures at the manufacturing level of the economy. The overall reading is expected to show a 0.2% decline from September’s level while the core data is expected to rise 0.1%. Weaker than expected readings would be good news for bonds and mortgage rates, while larger than forecasted increases could lead to higher mortgage rates tomorrow morning.

We will also get last week’s unemployment figures from the Labor Department early tomorrow morning. They are expected to announce that 333,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s total of 339,000, indicating a small sign of strength in the employment sector. Ideally, the bond market would like to see a large increase in new claims, meaning the employment sector was weaker than expected. However, since this weekly report tracks only a single week’s worth of initial claims, it usually takes a large variance from forecasts to see the data influence mortgage rates.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 19, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Tuesday’s bond market has opened down slightly with stocks showing small gains. The Dow is currently up 33 points while the Nasdaq is up 4 points. The bond market is currently down 3/32, which should keep this this morning’s mortgage rates very close to yesterday’s morning pricing. The 10-year Treasury Note yield did close below 2.70% yesterday (currently 2.69%), so we also should be watching it to move further below that level or pop back above. Such a move would help indicate mortgage rate direction, assuming tomorrow’s reports and news show no surprises.

The 3rd Quarter Employment Cost Index (ECI) was released early this morning, revealing a 0.4% increase. This was just slightly weaker than the 0.5% that was forecasted, meaning employer costs for wages and benefits did not rise as much as many had thought. That makes the data favorable for the bond market and mortgage rates but it was not enough of a variance to have much of an impact on today’s pricing.

Tomorrow is the most active day of the week in terms of scheduled events relevant to mortgage rates with four that we need to watch. Two of the day’s economic releases are considered highly important to the bond market. The Commerce Department will give us one of those when they post October’s Retail Sales figures at 8:30 AM ET tomorrow. This data measures consumer level or retail spending. It is considered extremely important to the markets because it makes up over two-thirds of the U.S. economy. It is expected to show a 0.1% increase in retail-level spending, meaning consumers spent just a bit more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If tomorrow’s report reveals a decline in spending that indicates consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If i! t shows an unexpected increase, mortgage rates will likely move higher.

The second report of the morning will be the release of October’s Consumer Price Index (CPI) from the Labor Department, which is one of the two key inflation readings on tap this week. The CPI measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If it reveals stronger than expected readings, indicating that inflationary pressures are rising at the consumer level, the bond market will probably react negatively and cause mortgage rates to move higher. Analysts are expecting to see no change in the overall reading and a 0.2% increase in the core data.

October’s Existing Home Sales data will be posted by the National Association of Realtors at 10:00 AM ET tomorrow morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking home resales in the U.S. This report is expected to show a small decline in sales, meaning the housing sector weakened slightly last month. That would be good news for the bond market and mortgage pricing, but unless it shows a significant surprise, it will likely not have a major impact on mortgage rates.

The final relevant event of the day is the release of the minutes from the last FOMC meeting. Traders will be looking for any indication of the Fed’s next move regarding monetary policy or potential tapering of their current bond purchases. They will be released at 2:00 PM ET, so any reaction will come during afternoon trading. This release is one of those that may cause some volatility in the markets after they are posted, or could be a non-factor. If they show anything surprising, we may see some movement in rates Wednesday afternoon, but it is more likely there will be little reaction.

 

 

 

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 18, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Monday’s bond market is starting the week off in positive territory. The major stock indexes are mixed during early trading with the Dow up 46 points and the Nasdaq down 5 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.

There is nothing of importance scheduled for release today to drive trading, but the rest of the week has five economic reports scheduled for release that are relevant to mortgage rates in addition to the minutes from last month’s FOMC meeting. A couple of the reports are considered highly important to the markets, meaning we could see noticeable movement in rates more than one day.

It starts tomorrow with the release of the 3rd Quarter Employment Cost Index (ECI) at 8:30 AM ET tomorrow. This data tracks employer costs for salaries and benefits, giving us an indication of wage inflation pressures. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.5%. A smaller than expected increase would be good news for mortgage rates, but this is not one of the more important reports of the week. Therefore, it will likely take a large variance from forecasts for this report of have a noticeable influence on mortgage pricing.

Overall, I am expecting Wednesday to be the most active day for mortgage rates with three economic reports and the FOMC minutes set for release, but Thursday could be a little volatile also with the second inflation reading of the week. The yield on the benchmark 10-year Treasury note closed last week just above 2.70% but this morning’s gains have pushed it below that support level. I am watching this move carefully to see if it can hold. If it does, there appears to be plenty of room for more improvements. On the other hand, a rebound above 2.70% would renew my concerns about further increases to mortgage rates in the immediate future.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 15, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Friday’s bond market has opened flat with stocks mixed and no key economic news to drive trading today. The stock markets are fairly calm also during early trading with the Dow up 24 points and the Nasdaq down 1 point. The bond market is currently unchanged from yesterday’s close, but we will likely still see an improvement in this morning’s mortgage rates of approximately .125 of a discount point due to strength late Thursday.

Yesterday’s 30-year Treasury Bond auction didn’t go nearly as well as Wednesday’s 10-year Note sale did. A couple of the gauges we use to measure investor demand showed much weaker results than Wednesday’s auction. That would be bad news for the bond and mortgage markets, but the reaction in afternoon trading and mortgage pricing was kept to a minimum yesterday.

We saw some gains in bonds late in the day yesterday, pushing the yield on the benchmark 10-year Treasury Note down to 2.70%. This morning’s flat open in bonds has kept the yield at that relatively important level. If it does not break below 2.70% and stay below, there is a good possibility of seeing it rise back above 2.72% or even higher. Since mortgage rates tend to follow bond yields, this would translate into higher mortgage rates. Accordingly, please proceed carefully if still floating an interest rate and closing in the near future.

October’s Industrial Production was posted at 9:15 AM ET this morning, revealing a 0.1% decline in output and U.S. factories, mines and utilities last month. This was a little weaker than the 0.1% increase that was expected, so it indicates that the manufacturing sector may have been softer than many had thought. That makes the data favorable for the bond market and mortgage rates, although this is only a moderately important piece of data.

Next week had several highly important economic releases scheduled that are likely to be influential to mortgage rates. They include two key inflation readings and a very important measurement of consumer spending in addition to the minutes from the most recent FOMC meeting. There are a couple of other reports due to be posted, but the most important ones are set for the middle part of the week. There is nothing of relevance scheduled for Monday, so we can expect weekend news to be the biggest factor on bond trading and mortgage rate movement that day.

 

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 14, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Thursday’s bond market has opened in positive territory with stocks relatively calm and no major economic data in tap today. The major stock indexes are mixed with the Dow up 25 points and the Nasdaq down 3 points. The bond market is currently up 9/32, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

Besides this morning’s economic news, we also have the Senate confirmation hearing for Fed Chairman Bernanke’s replacement. Current Vice Chairman Janet Yellen was nominated to fill Mr. Bernanke’s shoes when his current term expires January 31, 2014. The hearing this morning likely isn’t going to bring any significant surprises, especially since her prepared statement was released yesterday. If something important enough to affect the markets is said, it will come from the Q&A portion of the proceeding. Generally speaking, Ms. Yellen is considered to be fairly accommodating in terms of keeping stimulus programs in place and will likely prefer to start raising key short-term interest rates later than sooner. In other words- bond market friendly. Any comments made to contradict that theory is more likely to negatively impact bonds and mortgage rates than a supporting statement will improve rates, at least today.

The Labor Department gave us the first of this morning’s three pieces of economic data. They announced that 339,000 new claims for unemployment benefits were filed last week. This was higher than forecasts of 330,000 new claims. Also, the previous week’s total was revised upward from 336,000 to 341,000 initial claims, indicating the employment sector was weaker than thought both weeks. Dissecting the data shows that analysts were expecting to see new claims fall by 6,000 but actually only slipped 2,000 and that was from a higher level of the previous week. That makes the data slightly favorable to the bond market and mortgage rates because it hints at weaker economic conditions.

September’s Goods and Services Trade Balance was posted early this morning also, revealing a $41.8 billion trade deficit during the month. That exceeded forecasts of $39.1 billion, however, it was not enough of a variance from a very minor report for the results to impact this morning’s bond trading and mortgage pricing.

The final report of the morning was the 3rd Quarter Productivity reading. It came in at a 1.9% annual rate, nearly matching forecasts of 2.0%. That makes the headline reading neutral for the bond market although a secondary reading that tracks labor costs showed a moderate decline when it was expected to rise. (-0.6% vs +0.8%). That will allow us to treat the data as slightly favorable for mortgage rates since weakening labor costs reduces wage-inflation concerns in the markets.

Yesterday’s 10-year Treasury Note auction actually went pretty well with several benchmarks we use to gauge investor demand showing a high level of investor interest in the securities. That is good news and helped boost prices in the broader bond market during afternoon trading yesterday and contributed to an afternoon improvement in mortgage rates. It also helps us to be optimistic about today’s 30year Bond auction. If we get similar results from today’s sale, it is possible to see further improvements to bond prices and mortgage pricing later today.

October’s Industrial Production report is tomorrow’s only economic data that is likely to affect mortgage rates. It will be posted at 9:15 AM ET, giving us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to reveal a 0.1% increase in production, indicating little strength in the manufacturing sector. Stronger levels of production would be considered bad news for the bond market and mortgage rates, but as with today’s data, this is not expected to greatly influence the markets. Therefore, it will likely take a sizable variance from forecasts for it to have a noticeable impact on mortgage pricing.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – November 13, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Wednesday’s bond market has opened in positive territory with stocks showing early losses. The Dow is currently down 70 points while the Nasdaq is down 15 points. The bond market is currently up 9/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.

Today has little scheduled in terms of economic data, but we do have the first of two Treasury auctions that have a decent chance of affecting mortgage rates. 10-year Treasury Notes are being sold today while 30-year Bonds will be auctioned tomorrow. The 10-year sale is the more important of the two for mortgage rates as it will give us a better indication of demand for mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading today and/or tomorrow. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates.

Tomorrow brings us the release of three minor economic reports for the markets to digest, all at 8:30 AM ET. The first is the weekly unemployment update from the Labor Department, who is expected to announce that 330,000 new claims for unemployment benefits were filed last week. This would be a decline from the 336,000 initial claims of the previous week, indicating that the employment sector strengthened since then. The higher the number of new claims, the better the news it is for the bond market and mortgage rates because rising claims points towards a softening labor market.

Next up is September’s Goods and Services Trade Balance report that gives us the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates. Analysts are expecting to see a $39.1 billion trade deficit that would be just slightly higher than the $38.8 billion from August.

The final report of the morning is the release of the 3rd Quarter Productivity reading. It is expected to show a 2.0% increase in worker productivity during the third quarter. A larger increase would be good news for the bond market because higher levels of employee productivity allow the economy to expand without inflationary pressures being a concern. However, this data usually has a minimal impact on mortgage rates unless it shows a significant variance from forecasts.

Lake Tahoe Home Loans – November 8, 2013 – Commentary

 

Commentary-November 8, 2013

Here’s what we’re up against. Some economic indicators seem to reflect, more than anything else, the strength of the economy just prior to the time when the government was shut down. The Index of Leading Indicators, for example, which takes more time to compile than do many other data reports, told us that the economy was quite strong just before the ax fell (see bottom right).

Other indicators suggest, if tentatively, much the same thing. The ISM [Institute of Supply Management] lets us know that manufacturing and non-manufacturing orders were strengthening. Factory orders, too, looked increasingly healthy.

But what has happened?

Purchase money mortgage applications—the loans with which real estate purchases are financed—fell from an additional 2% in the week ending 10/25, dropping by 5% the following week. And a fall-off in pending home sales at the end of the month (noted last week) resulted in a rather grim Pending Home Sales Report. Real estate, which seemed to be one of the healthiest sectors in our economy, is suddenly looking frail.

One instructive aspect of this development is that it suggests the results of the government shut-down in the real estate market may have been more pronounced than many analysts thought at first. Indeed, we might surmise that the uncertainties bred by the problems our government experienced in trying to reach an accord regarding our sovereign debt seem to have infected the real estate market for the moment, causing many potential homebuyers to find a quiet place on the sidelines. Most analysts expect the weakness in the Pending Home Sales Report to show up in a weaker completed sales volume in November and December than in recent months.

Can we find a silver lining here? Yes. We can see indications that the overall economy may have the ability to recovery fairly quickly from the recent financial fiasco. But that’s assuming we don’t fall into more hopeless disagreement as the debt ceiling issue approaches again. Odds are fairly good that we won’t, but the fact that we must talk about odds instead of near-certainties means many consumers will be reluctant to make big financial decisions until we have reason to believe that the future of the economy is likely to be good.

As the Thanksgiving season approaches, we still have much to be grateful for. Here’s to the health and the strength of the marketplace!