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Lake Tahoe Mortgage Rate Trends- January 30, 2015

Friday’s bond market has opened well in positive territory following a much weaker than predicted key economic reading. The stock markets are reacting to the same news, pushing the Dow lower by 152 points and the Nasdaq down 27 points. The bond market is currently up 24/32 (1.67%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.

The first of this morning’s three relevant economic reports was the initial 4th quarter GDP reading that showed the economy grew at a 2.6% annual pace during the last three months of 2014. This was well below forecasts of a 3.2% rate and means the U.S. economy was not as strong as many had thought. That is clearly favorable news for bonds because long-term securities tend to thrive in weaker economic conditions. And on the same token, what is good for bonds is usually negative for stocks. Hence the bond rally and stock sell-off this morning, leading to an improvement in mortgage rates.

The second release of the morning was practically a non-factor in today’s early trading and mortgage pricing. The Labor Department announced the 4th Quarter Employment Cost Index (ECI) rose 0.6%. This was slightly above forecasts and indicates wage pressures were stronger than expected. Still, this usually is not a highly influential report and has not had an impact on this morning’s rates.

The final economic report of the week was the revised University of Michigan Index of Consumer Sentiment reading for January. It was posted just before 10:00 AM ET, revealing a 98.1 reading. This was very close to the preliminary and forecasted reading of 98.2, showing that consumer sentiment changed little since the preliminary estimate. That made the data neutral and irrelevant to today’s mortgage rates.

Next week has a handful or reports scheduled for release but it is not the number of releases that is of concern. The week’s calendar includes two highly important releases including the almighty monthly Employment report. Monday has two of those reports with December’s Personal Income and Outlays in addition to January’s ISM index. Both can move mortgage rates, so it is likely we will not see a calm start to the week. Look for details on next week’s events in Sunday evening’s weekly calendar.

Lake Tahoe Mortgage Rate Trends- January 29, 2015

Thursday’s bond market has opened in negative territory, giving back some of yesterday’s afternoon rally. The stock markets are mixed with the Dow up 21 points and the Nasdaq down 15 points. The bond market is currently down 11/32 (1.75%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point if comparing to yesterday’s afternoon post-FOMC pricing.

There was only one relevant economic report posted this morning. That was last week’s unemployment numbers at 8:30 AM ET. The release showed that 265,000 new claims for unemployment benefits were filed last week, down considerably from the previous week’s revised 308,000 new claims and well below forecasts of 300,000. It was also the lowest number of weekly filings since April 2000. Because falling claims indicates a strengthening employment sector, this morning’s news was negative for bonds and mortgage rates.

We also have today’s Treasury auctions to watch as they have the potential to influence trading in the broader bond market and possibly affect mortgage rates. The Fed will auction 5-year and 7-year Treasury Notes today. If the sales are met with a strong demand from investors, bonds may improve during afternoon hours. If they draw a lackluster interest, they could lead to bond selling and higher mortgage rates. The 5-year auction results will be posted at 11:30 AM while the 7-year will come at 1:00 PM ET, so any reaction will come during late morning and/or early afternoon hours.

Tomorrow also has three economic reports set for release, starting with what is arguably the single most important economic report that we see regularly. This would be the initial quarterly Gross Domestic Product (GDP) reading. Tomorrow’s posting is the first of three we will get for the 4th quarter. This data is so important because it is considered to be the best measurement of economic activity. The GDP itself is the total sum of all goods and services produced in the United States. Its results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. This initial reading will be followed by two revisions, each released approximately one month apart. Last quarter’s first reading, which usually carries the most significance, is expected to show the economy grew at an annual rate of 3.2%. A noticeably weaker reading would be great news for the bond market, questioning the pace of economic growth. That would likely fuel stock selling and a rally in bonds that should push mortgage rates lower tomorrow. However, a larger than expected increase, indicating the economy was stronger than thought, will probably fuel bond selling and lead to higher mortgage rates.

The second release of the day will be the 4th Quarter Employment Cost Index (ECI), also at 8:30 AM ET. This index measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. If wages are rising, consumers have more money to spend and businesses usually need to charge more for their products and services. The report is considered moderately important and usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.5%. A lower than expected reading would be favorable to bonds and mortgage rates, but unless we see a large variance from forecasts and no surprises in the GDP I am not expecting this report to have much of an influence on rates.

The final economic report of the week is the revised reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET tomorrow. This index is a measurement of consumer confidence that is thought to indicate consumer willingness to spend. If consumers are feeling more confident in their financial and employment situations, they are more apt to spend more, fueling economic growth. I don’t see this data having much of an impact on the markets or mortgage rates unless we see a large revision from the preliminary reading of 98.2.

Lake Tahoe Mortgage Rate Trends- January 28, 2015

Wednesday’s bond market has opened in positive territory despite a lack of economic data and early stock gains. Stocks are showing moderate gains with the Dow up 76 points and the Nasdaq up 43 points. The bond market is currently up 7/32 (1.80%), but due to weakness late yesterday, we likely will see little change in this morning’s mortgage rates.

There is no economic data scheduled for release today, but we do have the 5-year Treasury Note auction and more importantly, the FOMC meeting adjournment. Today’s Treasury auction results will be posted at 1:00 PM ET. If the sale was met with a strong demand from investors, the broader bond market may improve during early afternoon trading. If there was a lackluster interest, we could see bond selling and higher mortgage rates shortly after.

However, the focus of afternoon trading will be the two-day FOMC meeting that adjourns at 2:00 PM ET. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking at the post-meeting statement for any indication of the Fed’s change in sentiment about the economy and when the first increase to short-term rates will be made. There is a decent possibility of seeing some afternoon volatility in the markets due this statement. However, I would be surprised if it revealed any significant surprises or changes to sentiment on the Fed’s monetary policy plans.

There is nothing of significance scheduled for tomorrow except for weekly unemployment numbers and the 7-year Treasury Note auction. We will be posting an update to this report today shortly after the markets have an opportunity to react to this afternoon’s events. They will be addressed in this afternoon’s revision.

Lake Tahoe Mortgage Rate Trends- January 27, 2015

Tuesday’s bond market has opened well in positive territory following mixed economic data and significant selling in stocks. The stock markets are in selling mode this morning due to economic data and disappointing earnings news, combined with skeleton trading staff because of the storm in the Northeast. This has the Dow down 294 points and the Nasdaq down 83 points. The bond market is currently up 18/32, which should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point. Weakness in trading late yesterday is preventing more of an improvement if comparing to Monday’s morning pricing.

The Commerce Department gave us this week’s first relevant data with the release of December’s Durable Goods Orders at 8:30 AM ET. It revealed a 3.4% decline in new orders at U.S. factories for big-ticket products such as appliances, electronics and airplanes. Even though this headline number is known to be quite volatile, this was still a pretty wide variance from forecasts of a 0.6% increase. A secondary reading that excludes more pricy and volatile airplane and other transportation orders showed a 0.8% decline when analysts were expecting to see a 0.7% increase. That also supports the headline number in indicating the manufacturing sector was softer than many had thought last month, making this report good news for bonds and mortgage rates.

January’s Consumer Confidence Index (CCI) was released at 10:00 AM ET, showing a surprising reading of 102.9. This was much higher than analysts were calling for and a sizable jump from December’s 93.1. In fact, it was the strongest reading since August 2007 and indicates that surveyed consumers were much more optimistic about their own financial and employment situations this month than nearly anyone had thought. That is bad news for bonds and mortgage rates because rising confidence means consumers are more apt to spend, fueling economic growth.

Today’s third piece of data was the least important of the morning’s batch but did show a sizable difference between forecasts and its actual results. The Commerce Department gave us December’s New Home Sales figures late this morning. They showed an 11.6% rise in sales of newly constructed homes, greatly exceeding forecasts of an increase of 2.7%. This means the new home portion of the housing sector was much stronger than expected last month. Therefore, we should consider it bad news for bonds and mortgage rates.

There is no economic data scheduled for release tomorrow that is expected to influence mortgage pricing. We do however have two afternoon events that could, with one being much more important than the other. The first afternoon event is the 5-year Treasury Note auction results at 1:00 PM ET. If the sale was met with a strong demand from investors, the broader bond market may improve during early afternoon trading. If there was a lackluster interest, we could see bond selling and higher mortgage rates shortly after.

This week’s two-day FOMC meeting that begins today will adjourn at 2:00 PM ET tomorrow. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed’s change in sentiment about the economy and when the first increase to short-term rates will be made. There is a decent possibility of seeing some afternoon volatility in the markets due to the post-meeting statement. However, I would be surprised if the statement revealed any significant surprises or changes to sentiment on the Fed’s monetary policy plans.

Lake Tahoe Mortgage Rate Trends- January 26, 2015

Monday’s bond market has opened in negative territory as investors prepare for this week’s activities. The stock markets are starting the week with minor losses of 19 points in the Dow and 4 points in the Nasdaq. The bond market is currently down 15/32 (1.84%), but due to strength late Friday, I don’t believe we will see too much of a change in this morning’s mortgage rates.

There is nothing of importance being posted today. The rest of the week is quite busy though with six economic reports along with other events that are relevant to bond trading and mortgage rates. In addition to those six reports, there is also a two-day FOMC meeting and a couple of Treasury auctions that have the potential to affect bond trading enough to slightly move rates. The week’s calendar kicks off tomorrow with three economic reports.

The first is December’s Durable Goods Orders at 8:30 AM ET that helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, but is currently expected to show an increase in orders of approximately 0.6%. A decline in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on tomorrow’s mortgage pricing because of the large swings that are common in the data. Bond traders would prefer to see a large decline that would indicate weakness in the manufacturing sector.

January’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow. This report is considered to be of moderate to high importance to the bond market and therefore can move mortgage rates if it shows any surprises. It is an indicator of consumer sentiment, which is important because waning confidence in their own financial situations usually means that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, market participants are very attentive to related data. Analysts are expecting to see a rise from December’s reading, indicating consumer confidence was stronger than last month. A reading much smaller than the expected 95.5 would be ideal for the bond market and mortgage rates. A higher reading than forecasts would hint that consumers are more likely to spend in the immediate future, fueling economic growth and possibly pushing mortgage pricing higher tomorrow.

December’s New Home Sales is the final release of the day, also at 10:00 AM ET tomorrow. It is considered to be the sister release to last week’s Existing Home Sales, giving us a small snapshot of housing sector strength. It tracks a much smaller portion of home sales than last week’s report did and is forecasted to show a decline in sales of newly constructed homes. However, this data is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.

Overall, it is difficult to label any particular day this week as the most important for mortgage rates with so much going on. Wednesday has no economic data being posted, but it does have the FOMC meeting adjournment that is always big news. Friday’s GDP report is highly important but tomorrow has multiple reports set for release that can influence mortgage rates. And stocks can affect bond trading and mortgage pricing any day, as we have seen with all the recent volatility. With all of this scheduled, there is a decent chance of seeing a very active week in mortgage rates this week. Therefore, please maintain constant contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 25, 2015

This week is quite busy with six economic reports along with other events that are relevant to bond trading and mortgage rates. In addition to those six reports, there is also a two-day FOMC meeting and a couple of Treasury auctions that have the potential to affect bond trading enough to slightly move rates. There is nothing of importance set for release tomorrow, but we still should see some movements in the markets due to weekend geopolitical and weather-related news.

The week’s calendar kicks off Tuesday with three economic reports. The first is December’s Durable Goods Orders at 8:30 AM ET Tuesday that helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, but is currently expected to show an increase in orders of approximately 0.6%. A decline in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on Tuesday’s mortgage pricing because of the large swings that are common in the data. Bond traders would prefer to see a large decline that would indicate weakness in the manufacturing sector.

January’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET Tuesday. This report is considered to be of moderate to high importance to the bond market and therefore can move mortgage rates if it shows any surprises. It is an indicator of consumer sentiment, which is important because waning confidence in their own financial situations usually means that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, market participants are very attentive to related data. Analysts are expecting to see a rise from December’s reading, indicating consumer confidence was stronger than last month. A reading much smaller than the expected 95.5 would be ideal for the bond market and mortgage rates. A higher reading than forecasts would hint that consumers are more likely to spend in the immediate future, fueling economic growth and possibly pushing mortgage pricing higher Tuesday.

December’s New Home Sales will also be posted late Tuesday morning. It is considered to be the sister release to last week’s Existing Home Sales, giving us a small snapshot of housing sector strength. It tracks a much smaller portion of home sales than last week’s report did and is forecasted to show a decline in sales of newly constructed homes. However, this data is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.

This year’s first FOMC meeting that begins Tuesday will adjourn Wednesday at 2:00 PM ET. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed’s change in sentiment about the economy and when a potential change to short-term rates will be made. There is a decent possibility of seeing some afternoon volatility in the markets Wednesday due to the 2:00 PM ET post-meeting statement. However, I would be surprised if the statement revealed any significant surprises or changes to monetary policy.

Friday has the remaining three reports, starting with what is arguably the single most important economic report that we see regularly. This would be the initial quarterly Gross Domestic Product (GDP) reading. Friday’s release is the first of three we will get for the 4th quarter. This data is so important because it is considered to be the best measurement of economic activity. The GDP itself is the total sum of all goods and services produced in the United States. Its results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. This initial reading will be followed by two revisions, each released approximately one month apart. Last quarter’s first reading, which usually carries the most significance, is expected to show the economy grew at an annual rate of 3.2%. A noticeably weaker reading would be great news for the bond market, questioning the pace of economic growth. That would likely fuel stock selling and a rally in bonds that should push mortgage rates lower Friday morning. However, a larger than expected increase, indicating the economy was stronger than thought, will probably fuel bond selling and lead to higher mortgage rates.

The second release of the day will be the 4th Quarter Employment Cost Index (ECI), also at 8:30 AM ET. This index measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. If wages are rising, consumers have more money to spend and businesses usually need to charge more for their products and services. The report is considered moderately important and usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.5%. A lower than expected reading would be favorable to bonds and mortgage rates Friday, but unless we see a large variance from forecasts I am not expecting this report to have much of an influence on rates.

The final economic report of the week is the revised reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET Friday. This index is another measurement of consumer confidence that is thought to indicate consumer willingness to spend. I don’t see this data having much of an impact on the markets or mortgage rates unless we see a large revision from the preliminary reading of 98.2.

Also worth noting, there are two relatively important Treasury auctions for the markets to digest. The Fed will auction 5-year and 7-year Treasury Notes Wednesday and Thursday respectively. If the sales are met with a strong demand from investors, the broader bond market may improve during afternoon hours. If they draw a lackluster interest, they could lead to bond selling and higher mortgage rates mid-afternoon Wednesday and/or Thursday.

Overall, it is difficult to label any particular day this week as the most important for mortgage rates with so much going on. Wednesday has no economic data being posted, but it does have the FOMC meeting adjournment that is always big news. Friday’s GDP report is highly important but Tuesday has multiple reports set for release that can influence mortgage rates. And stocks can affect bond trading and mortgage pricing any day, as we have seen with all the recent volatility. With all of this scheduled, there is a decent chance of seeing a very active week in mortgage rates this week. Therefore, please maintain constant contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 23, 2015

Friday’s bond market has opened in positive territory with no negative surprises in this morning’s economic data and early stock weakness helping to make bonds more attractive. The major stock indexes are looking to close the week out on a negative note. The Dow is currently down 79 points while the Nasdaq has lost 6 points. The bond market is currently up 19/32 (1.80%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.

Neither of this morning’s economic reports gave us a significant surprise. The National Association of Realtors announced late this morning that home resales rose 2.4% last month, indicating modest growth in the housing sector. While the sign of growth is technically bad news for bonds, it was a smaller increase in sales than many had thought. That makes the data neutral to slightly favorable for bonds and mortgage rates.

December’s Leading Economic Indicators (LEI) was the second report of the morning, revealing a 0.5% rise. This means that the indicators are predicting an increase in economic activity over the next several months. Since it pegged forecasts, it also has had little impact on this morning’s mortgage pricing.

Next week brings us a handful of economic reports that have the potential to affect mortgage rates, including one that is highly influential to the financial and mortgage markets. In addition to the reports, we also have a couple of semi-relevant Treasury auctions and a highly relevant FOMC meeting. There is nothing of importance scheduled for Monday, so expect weekend news and stock movement to be the biggest factors in that day’s mortgage rate changes. Look for details on next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- January 22, 2015

Thursday’s bond market initially opened in negative territory but has since recovered those early losses. The stock markets are showing sizable gains with the Dow up 118 points and the Nasdaq up 31 points. The bond market is currently up 5/32 (1.85%), which should keep this morning’s mortgage rates at yesterday’s early levels. Some lenders did revise rates higher during afternoon trading, but this morning’s small gains should offset that adjustment.

Today’s sole piece of economic data was last week’s unemployment numbers at 8:30 AM ET. They revealed that 307,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised total of 317,000. The declining number of claims indicates the employment sector was a bit stronger last week than the previous week. However, because analysts were expecting to see that 302,000 initial claims were made, the 307,000 hints of a weaker than thought sector and makes the data neutral for mortgage rates.

The European Central Bank (ECB) actually took center stage this morning with their announcement of a 1.2 trillion euro bond buying program (60 billion per month) in an attempt to boost economic growth and prevent price deflation there. This is similar to our QE programs of the past, the latest that ended late last year. There was some volatility in the global markets following the announcement, including here in the U.S. The net effect on today’s mortgage rates is favorable though because bonds appeared to be well in negative ground before the official announcement was made. Prior to it, it looked as if this morning was going to be a negative day for bonds with an increase in mortgage rates.

Tomorrow morning has two pieces of economic data that may possibly affect mortgage rates. Both reports are scheduled for release at 10:00 AM ET. The first is December’s Existing Home Sales from the National Association of Realtors. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a rise in sales from November’s level, meaning the housing sector strengthened last month. Ideally, bond traders would like to see a decline in sales that would point toward housing sector weakness because a weakening housing sector makes broader economic growth more difficult. However, as long we don’t see a significant surprise in its results, it shouldn’t have a noticeable impact on Friday’s mortgage rates.

December’s Leading Economic Indicators (LEI) is the final report of the week. The Conference Board, who is a New York-based business research group compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow’s release is expected to show a 0.5% increase, meaning the indicators are predicting an increase in economic activity this spring. As long as we don’t see a much stronger than predicted increase, I don’t think this data will have much of an influence on mortgage pricing.

Lake Tahoe Mortgage Rate Trends- January 21, 2015

Wednesday’s bond market has opened flat with today’s only relevant economic data showing stronger than expected results. The stock markets are showing minor gains with the Dow up 4 points and the Nasdaq up 29 points. The bond market is currently nearly unchanged from yesterday’s close (1.79%), but we will likely still see an increase in this morning’s mortgage rates of approximately .125 of a discount if comparing to yesterday early pricing due to weakness in afternoon trading.

The Commerce Department said that new housing construction starts rose 4.4% last month, exceeding forecasts. That makes the data technically negative for the bond and mortgage markets, but this report is not considered to be highly important and the variance from expectations was not significant. Therefore, the net impact this news had on this morning’s rates was minimal.

Also worth mentioning today are rumors that the European Central Bank (ECB) already has decided what action they will take to boost economic activity in the Euro region. Supposedly they are going to start buying 50 billion euros worth of bonds per month starting in March. The rumor has the program expected to continue until the end of 2016. This move was widely expected in the global markets, but there has been some debate about the size of the campaign and the monthly purchase amount. Keep in mind that this is just a rumor at this time and will not be confirmed until early tomorrow morning our time when the official announcement is released.

The only economic data being posted tomorrow that has the potential to affect mortgage rates is last week’s unemployment numbers at 8:30 AM ET. They are expected to show that 302,000 new claims for unemployment benefits were filed last week, down from the previous week’s 316,000 initial claims. Rising initial claims indicates employment sector weakness, so the higher the number the better the news it is for bonds and mortgage rates. Although, because this is only a weekly snapshot, it usually does not cause much movement in mortgage pricing unless it shows a significant variance from forecasts.

Lake Tahoe Mortgage Rate Trends- January 20, 2015

Tuesday’s bond market has opened in positive territory as investors prepare for this week’s global events. Stocks are starting the holiday-shortened week with relatively minor losses of 54 points in the Dow and 5 points in the Nasdaq. The bond market is currently up 15/32 (1.78%), but due to heavy selling Friday before the long weekend, we should see little change in this morning’s mortgage rates or even a slight increase if comparing to Friday’s morning pricing.

There is nothing of importance being released today that is expected to affect rates. The rest of the week brings us the release of only three pieces of monthly economic data for the markets to digest, but none of them are considered to be highly important for mortgage rates. We also have some key economic data coming from overseas and an FOMC-equivalent event in Europe later this week that is expected to yield a new bond-buying program in the Euro zone in an attempt to boost economic growth there. In addition to all of that, we also have earnings releases from several big-name companies that traditionally affect broader stock trading and therefore, could have an impact on the bond market.

The first data of the week is December’s Housing Starts at 8:30 AM tomorrow. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don’t see it causing much movement in mortgage rates tomorrow but does carry the potential to affect trading and rates if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.

Overall, despite a light week in terms of the number of economic reports scheduled, we still may see a very active week in the markets and mortgage pricing. We will be focusing on items overseas this week just as much as our economic reports. Thursday or Friday are the best candidates for most important day of the week. I suspect we will have more than one day of volatility and intraday revisions to mortgage rates though. Accordingly, please maintain contact with your mortgage professional and proceed cautiously if still floating an interest rate and closing in the near future.