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Lake Tahoe Mortgage Rate Trends- February 27, 2015

Friday’s bond market has opened in positive territory despite stronger than predicted economic news. The stock markets are showing minor losses but are calm with the Dow down 19 points and the Nasdaq down 2 points. The bond market is currently up 6/32 (2.01%), but due to weakness late yesterday we can expect this morning’s mortgage rates to be very close to yesterday’s early pricing. This morning’s early strength simply offsets that late weakness from yesterday.

The first of two revisions to the 4th Quarter GDP reading was posted early this morning, revealing that the economy grew at an annual rate of 2.2% during the last three months of last year. This was close to forecasts of a 2.1% rate but was a decline from the preliminary estimate of 2.6% that was issued last month. Since weaker economic conditions make bonds more attractive to investors, we can consider this news slightly positive for mortgage rates. The fact that it was not weaker than what was expected prevents it from clearly being good news.

Late this morning, the University of Michigan’s revised February Index of Consumer Sentiment was released. It showed a reading of 95.4 that exceeded forecasts and was an increase from the initial estimate of 93.6. That is bad news for the bond market because rising consumer sentiment about their financial and employment situations means they are more likely to make a large purchase in the near future. Since consumer spending makes up such a large portion of our economy, bond traders prefer to see weaker levels of confidence and spending. Fortunately, this is only a moderately important report that has not had a significant impact on this morning’s rates.

Next brings us another handful of relevant economic reports, but in that batch are a couple of extremely important releases that can be highly influential on the financial and mortgage markets. The week’s activities start Monday with January’s Personal Income and Outlays report in addition to February’s ISM manufacturing index. They end with the almighty monthly Employment report Friday. It appears we are going to see some movement in rates as the week opens and closes. In between is not as busy but still has enough scheduled to cause noticeable movement in mortgage pricing. Look for details on these and the rest of next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- February 26, 2015

Wednesday’s bond market has opened flat with no Thursday’s bond market has opened down slightly following the release of mixed economic news and a fairly calm open in stocks. The major stock indexes are mixed during early trading with the Dow down 15 points and the Nasdaq up 4 points. The bond market is currently down 2/32 (1.97%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

There were three pieces of relevant economic data posted at 8:30 AM ET this morning. One was January’s Durable Goods Orders that showed a 2.8% increase in new factory orders for big-ticket products such as appliances, autos and airplanes. This was stronger than the 1.8% increase that was expected, indicating manufacturing sector strength. However, this data is known to be pretty volatile each month so the variance between forecasts and the actual increase wasn’t too concerning. A secondary reading in the report that excludes more volatile and costly transportation-related orders fell short of forecasts by 0.2%. Therefore, we can consider the data neutral for mortgage rates.

The second report of the day was January’s Consumer Price Index (CPI) that is considered to be a key measure of inflation at the consumer level of the economy. It revealed a 0.7% decline in the overall reading and a 0.2% increase in the core data that excludes more volatile food and energy prices. The overall reading was slightly weaker than expected but the core reading was stronger than forecasts. Accordingly, we should consider the news slightly negative for bonds and mortgage rates.

Last week’s unemployment numbers was the last piece of data posted this morning. They came in with 313,000 initial claims for benefits being filed last week. This was more than forecasts were calling for and a good sized increase from the previous week’s revised total of 282,000 new claims. Since rising claims point towards a softening employment sector, today’s report was good news for mortgage rates. Unfortunately, this is only a weekly snapshot, so its impact on this morning’s pricing has been minimal.

We also have today’s 7-year Treasury Note auction to watch. Yesterday’s 5-year Note sale went fairly well but not overly strong. Most of the indicators we use to gauge investor demand in the securities indicated an average or slightly better level of interest. That doesn’t give us much to be optimistic about or concerned with in today’s sale. Results will be posted at 1:00 PM ET, so any reaction will come during afternoon trading. High demand in the sale could lead to strength in the broader bond market and possibly lead to a slight improvement in rates this afternoon.

Tomorrow closes the week with two relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET. 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 2.1%, down from the initial estimate of 2.6% 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 larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will be released just before 10:00 AM ET tomorrow. Current forecasts show this index rising slightly from its preliminary estimate of 93.6. 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 GDP revision being released tomorrow.

Lake Tahoe Mortgage Rate Trends- February 25, 2015

Wednesday’s bond market has opened flat with no surprises in this morning’s events to cause much movement. The stock markets are also calm with the Dow down 2 points and the Nasdaq up 1 point. The bond market is currently almost unchanged from yesterday’s close (1.97%), but due to afternoon strength in trading yesterday, we should still see an improvement of approximately .250 of a discount point over Tuesday’s morning pricing.

January’s New Home Sales report was posted at 10:00 AM ET this morning, revealing little change in sales of newly constructed homes last month. Analysts were expecting to see a decline in sales, so we can technically consider the data bad news for bonds and mortgage rates. However, the data actually has had little influence on this morning’s mortgage rates.

Day two of Fed Chair Janet Yellen’s congressional testimony has failed to yield any surprises. We have seen little reaction in the markets to this morning’s statement and Q&A from the House Financial Services Committee. I suspect this will be a non-factor in this today’s trading and mortgage pricing.

We also have the first of this week’s two relatively important Treasury auctions taking place today. 5-year Treasury Notes are being sold today and 7-year Notes will go tomorrow. 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, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon hours.

In addition to the 7-year Note auction, tomorrow has three pieces of economic data scheduled for release, all of which will be posted at 8:30 AM ET. January’s Durable Goods Orders data will give us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 1.8% increase in new orders, hinting at manufacturing sector growth. This data is known to be volatile from month to month, so don’t be surprised to see a big headline number in this report.

The second report of the day is January’s Consumer Price Index (CPI). It measures inflationary pressures at the consumer level of the economy. A significant surprise in this data can have a noticeable impact on the financial markets, especially long-term securities such as mortgage-related bonds. Inflation isn’t exactly a concern currently, but there are many that feel that rapid inflation down the road is a threat, so analysts still track the readings closely. The report is expected to show a 0.6% decline in the overall index and a 0.1% rise in the more important core data that excludes food and energy costs. If we see weaker than expected readings, bond prices should rise and mortgage rates will likely fall tomorrow morning as long as long as the Durable Goods Orders data doesn’t offset.

Last week’s unemployment numbers will also be released early tomorrow morning. They are expected to show that 290,000 new claims for unemployment benefits were filed last week, up from the previous week’s 283,000 initial claims. Rising claims indicate employment sector weakness, so the higher the number the better the news it is for bonds and mortgage rates. Although it is worth noting that because this is only a weekly snapshot and comes with two important reports, it likely will not cause much movement in mortgage pricing unless it shows a significant variance from forecasts.

Lake Tahoe Mortgage Rate Trends- February 24, 2015

Tuesday’s bond market initially opened in negative territory but has since moved into positive ground following this morning’s economic data and Fed event. The stock markets are reacting favorably also with the Dow up 65 points and the Nasdaq up 1 point. The bond market is currently up 5/32 (2.04%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

Today’s big news was day one of Fed Chair Yellen’s semi-annual testimony on the status of the economy and monetary policy to Congress. She is speaking in front of the Senate Banking Committee today and will return for the House Financial Services committee tomorrow. Her most important comments addressed when the Fed will start raising key short-term interest rates and what will transpire before then. It appears the Fed has moved away from a specific time frame to make the first move and now will be deciding on a “meeting by meeting basis” that differs a little from previous comments. They also will remove the word “patient” from their post-FOMC meeting statement verbiage that had been watched closely by analysts and market participants when referencing when a potential move may come.

Overall, her testimony and the Q&A portion of the proceedings so far have not given us any earth-shattering news or surprises. The markets have had a reaction that is favorable for bonds and mortgage rates. However, it is somewhat muted compared to the potential an event like this can cause. Look for further movement as the proceeding progresses although I would be surprised to see a significant move either way in the major stock indexes or bond prices and mortgage rates.

February’s Consumer Confidence Index (CCI) was this morning’s sole piece of economic data. The Conference Board announced a reading of 96.4 that fell short of expectations and was a large decline from January’s revised 103.8 reading. This means surveyed consumers were less optimistic about their own financial and employment situations than last month. That indicates consumers are less likely to make a large purchase in the near future, making the data good news for the bond and mortgage markets.

Besides day two of Janet Yellen’s testimony, we also have a couple of other items that are worthy of our attention tomorrow. January’s New Home Sales report will be posted at 10:00 AM ET tomorrow, giving us a measure of housing sector strength and mortgage credit demand. However, it usually does not have a significant impact on bond trading or mortgage rates unless it shows a significant surprise. Tomorrow’s release is expected to show a decline in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The larger the decline, the better the news it is for bonds and mortgage rates.

Also tomorrow is the first of this week’s two relatively important Treasury auctions that may influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes tomorrow and 7-year Notes on Thursday. 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 to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

Lake Tahoe Mortgage Rate Trends- February 22, 2015

This week brings us the release of seven economic reports to be concerned with in addition to testimony from Fed Chairman Yellen and two potentially relevant Treasury auctions. A couple of the reports are considered to be highly important to the markets and mortgage rates. There is something scheduled each day that can move rates, so there is a strong chance of seeing an extremely active week for mortgage rates.

The first piece of data is January’s Existing Home Sales report by the National Association of Realtors late tomorrow morning. This data tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.

February’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET Tuesday morning. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from the 102.9 reading in January to 99.3 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many thought.

Fed Chairman Yellen will deliver the Fed’s semi-annual testimony on the status of the economy and monetary policy this week. She will be speaking to the Senate Banking Committee Tuesday and the House Financial Services Committee Wednesday. Both appearances are set to start at 10:00 AM ET. Her prepared statement on Tuesday will likely have the bigger influence on the markets but the Q&A session that follows may bring a surprise response also. Wednesday’s opening statement will probably mirror Tuesday’s so day two usually does not have the impact on the markets as day one does.

January’s New Home Sales report will be posted at 10:00 AM ET Wednesday morning. This is the least important report of the week, and is the sister report to the Existing Home Sales data. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates unless they show significant surprises. Wednesday’s report is expected to show a decline in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The larger the decline, the better the news it is for bonds and mortgage rates.

Thursday has a pair of monthly important reports scheduled for release, both at 8:30 AM ET. January’s Durable Goods Orders data will give us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 1.8% increase in new orders, hinting at manufacturing sector growth.

The second report of the day is January’s Consumer Price Index (CPI). It measures inflationary pressures at the consumer level of the economy. A significant surprise in this data can have a noticeable impact on the financial markets, especially long-term securities such as mortgage-related bonds. Inflation isn’t exactly a concern currently, but there are many that feel that rapid inflation down the road is a threat, so analysts still track the readings closely. The report is expected to show a 0.6% decline in the overall index and a 0.1% rise in the more important core data that excludes food and energy costs. If we see weaker than expected readings, bond prices should rise and mortgage rates will likely fall Thursday morning as long as long as the Durable Goods Orders data doesn’t offset.

Friday has the remaining two relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET Friday 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 2.1%, down from the initial estimate of 2.6% 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 larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing Friday.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will close out the week’s calendar just before 10:00 AM ET Friday. Current forecasts show this index rising slightly from its preliminary estimate of 93.6. 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 GDP revision being released Friday morning.

In addition to this week’s economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. 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 to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

Overall, I think Tuesday is the most important day of the week due to Fed Chair Yellen’s congressional testimony although Thursday and Friday’s economic data can also cause a fair amount of volatility in the markets. The calmest could be Tuesday but we should still see some movement in rates that day also. If floating an interest rate, it would be extremely prudent to maintain contact with your mortgage professional this week.

Lake Tahoe Mortgage Rate Trends- February 23, 2015

Monday’s bond market has opened in positive territory due to comments from overseas regarding the Greece situation and weaker than expected economic news here. The stock markets are starting the week off in negative ground with the Dow down 52 points and the Nasdaq down 7 points. The bond market is currently up 11/32, but due to weakness late Friday we likely will see little change in this morning’s mortgage rates if comparing to Friday’s morning pricing.

Today’s sole relevant economic data was January’s Existing Home Sales report by the National Association of Realtors at 10:00 AM ET. They announced that home resales fell 4.9% last month, slipping to their lowest level in 9 months. This was also weaker than what analysts were expecting, indicating the housing sector was softer than many had thought. That makes the data favorable for the bond and mortgage markets.

Tomorrow is going to be a very interesting day. There is relevant economic data scheduled for release, but it will be Fed Chair Yellen’s semi-annual testimony on the status of the economy and monetary policy in front of the Senate Banking Committee that will draw the most attention. She will repeat this Wednesday for the House Financial Services Committee. Both appearances are set to start at 10:00 AM ET. Her prepared statement tomorrow will likely have the bigger influence on the markets but the Q&A session that follows may bring a surprise response also. Wednesday’s opening statement will probably mirror tomorrow’s statement. Therefore, it is common for day two to not have the impact on the markets as day one does.

February’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow morning also. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from the 102.9 reading in January to 99.3 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many thought.

Overall, I think tomorrow is the most important day of the week due to Fed Chair Yellen’s congressional testimony although Thursday and Friday’s economic data can also cause a fair amount of volatility in the markets. The calmest could be Wednesday but we should still see some movement in rates that day also. If floating an interest rate, it would be extremely prudent to maintain contact with your mortgage professional this week.

Lake Tahoe Mortgage Rate Trends- February 20, 2015

Friday’s bond market has opened well in positive territory with stocks in negative ground and concerns about the financial issues with Greece still in the headlines. The major stock indexes are showing moderate losses of 56 points in the Dow and 9 points in the Nasdaq. The bond market is currently up 19/32 (2.05%), but due to some weakness in trading late yesterday, this morning’s improvement in mortgage rates will likely be limited to approximately .125 of a discount point.

There is nothing of importance scheduled for release today, so stocks and Greece bailout news are taking center stage this morning. European lenders and Greek leaders are meeting today to try to come to an agreement that would extend Greece’s bailout package that is currently due to expire at the end of this month. If no agreement is reached, many think Greece will be unable to pay its bills and will end up filing bankruptcy as a result. That would drive Greece out of the Euro currency and could severely disrupt the regional and possibly global economies.

As progress (or a lack of) is reported throughout the meeting, we can expect the markets to react accordingly. The early momentum has been favorable for bonds and not so much for stocks. If the major stock indexes extend their early losses, we could see more funds flow into bonds, driving prices higher and yields lower later today. Since mortgage rates tend to follow bond yields, this would be good news for mortgage shoppers. However, it is worth noting that the benchmark 10-year Treasury Note yield is getting closer to 2.00%. We may see some resistance at that level without a major event to push past it. Therefore, while there is a potential benefit to floating an interest rate currently, the risk of doing so may be growing as we get closer to that level.

We have a pretty full and active calendar next week that includes some important economic data, a couple of potentially influential Treasury auctions and semi-annual testimony from Fed Chair Yellen to Congress. There are events set for each day of the week, including Monday when January’s Existing Home Sales report will be posted. Look for details on next week’s schedule in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- February 19, 2015

Thursday’s bond market has opened in positive territory despite no significant economic news on tap today and a mixed open in stocks. The Dow is currently down 45 points while the Nasdaq is showing a 14 point gain. The bond market is currently up 4/32 (2.07%), which with yesterday’s afternoon strength should improve this morning’s mortgage rates by approximately .250 of a discount point if comparing to Wednesday’s morning pricing.

Yesterday’s afternoon bond rally coincided with the release of the minutes from the most recent FOMC meeting. The minutes indicated that more Fed members are concerned about raising key short-term interest rates too early because of economic issues overseas that may affect our growth here. That led many analysts to believe the first rate increase will come later than sooner. Because that signals the Fed is concerned about economic growth, it made bonds more attractive to investors.

There were two pieces of economic data posted this morning, but neither were considered highly important or had an influence on this morning’s mortgage rates. At 8:30 AM, we heard that 283,000 new claims for unemployment benefits were filed last week. This was a larger decline from the previous week’s 304,000 initial claims than analysts were expecting to see, meaning the employment sector was stronger last week than many had thought. That makes the data negative for bonds and mortgage rates. Fortunately though, this is only a weekly snapshot, so the impact on today’s rates has been minimal.

Also posted this morning was January’s Leading Economic Indicators (LEI) at 10:00 AM. The Conference Board announced a 0.2% rise in the indicators, meaning they are predicting modest economic growth over the next several months. This was slightly weaker than the 0.3% that was expected, but not enough of a variance to make a difference in today’s mortgage rates.

Tomorrow has nothing of relevance scheduled, so expect stock movement and overseas financial news, particularly regarding Greece, to be the biggest influence on bond trading and mortgage rates.

Lake Tahoe Mortgage Rate Trends- February 18, 2015

Wednesday’s bond has opened in positive territory following mostly favorable economic news. The stock markets are showing relatively minor losses during early trading with the Dow down 45 points and the Nasdaq down 6 points. The bond market is currently up 7/32 (2.12%), but due to strong selling late yesterday we should still see an increase in this morning’s mortgage rates of approximately .250 of a discount point over Tuesday’s morning pricing.

This morning had three economic reports released that were worth watching. The first and most important was January’s Producer Price Index (PPI) at 8:30 AM ET. It showed a 0.8% decline in the overall reading when analysts were expecting only a 0.4% drop. The better news was the 0.1% decline in the more important core data that excludes more volatile food and energy prices. Forecasts were calling for a 0.1% increase in the core reading. These readings indicate that inflationary pressures at the producer level of the economy eased last month, making the data good news for bonds and mortgage rates.

January’s Housing Starts report was also released early this morning, revealing a 2.0% decline in new home construction groundbreakings. The results point towards weakness in the new home portion of the housing sector. However, this was pretty close to forecasts and since the report is not considered to be of high importance to the markets, it has had minimal influence on this morning’s trading or mortgage pricing.

The third and final report of the morning was January’s Industrial Production data at 9:15 AM ET. This report showed a 0.2% increase in production at U.S. factories, mines and utilities. That fell short of the 0.4% increase that was expected, meaning factory output was not as strong as many had thought. Because this is just a moderately important report and it still showed an increase, we should consider the results neutral-to-slightly positive for rates. But in fact, it has had no impact on this morning’s mortgage rates.

We also will get the minutes from the most recent FOMC meeting later today. Traders will be looking for any indication of the Fed’s next move regarding monetary policy, particularly discussion about their first bump to key short-term interest rates. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility in the markets, or they may be a non-factor. However, they do carry the potential to influence mortgage rates so they should be watched.

Tomorrow has two pieces of economic data set for release, but neither is considered to be highly important to the markets. First up is last week’s unemployment figures at 8:30 AM ET. They are expected to show that 295,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s 304,000 initial claims. The higher the number of new claims, the better the news it is for mortgage rates as rising claims is a sign of employment sector weakness. However, because this report tracks only a single week’s worth of new claims, it usually takes a surprise spike or drop for it to noticeably affect mortgage rates.

The final piece of data this will be January’s Leading Economic Indicators (LEI) at 10:00 AM ET tomorrow. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.3% increase, meaning that economic activity may rise in the near future. A smaller than expected increase would be good news for the bond market and mortgage rates. Although, don’t expect this report to be a market mover either.

Lake Tahoe Mortgage Rate Trends- February 17, 2015

Tuesday’s bond has opened in negative territory following the holiday weekend that had the markets closed yesterday. The stock markets are starting the week with minor losses of 36 points in the Dow and 3 points in the Nasdaq. The bond market is currently down 5/32 (2.06%), which with Friday’s afternoon weakness should push this morning’s mortgage rates higher by approximately .125 of a discount point if comparing to Friday’s morning pricing.

There is nothing scheduled for release today that is relevant to mortgage rates. We are seeing some reaction to Greece news as their bailout showdown gets closer to coming to a head. It is safe to say that if stocks make a move this afternoon, bonds and mortgage rates will react. However, the general negative tone in the bond market of recent may pressure bonds without a noticeable move in the major stock indexes. Therefore, proceed cautiously if still floating an interest rate, especially since the most important day of the week for rates is clearly tomorrow.

Tomorrow morning has three of this week’s four pieces of monthly economic data that is likely to affect mortgage rates in addition to the FOMC minutes. The Labor Department will release their Producer Price Index (PPI) for January early tomorrow morning. It measures inflationary pressures at the producer level of the economy and is considered to be one of the key measures of inflation we see each month. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show a decline of 0.4% in the overall reading and a 0.1% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data as it would ease concerns about future inflation that make long-term securities less attractive to investors.

January’s Housing Starts will also be posted early tomorrow morning, giving us an indication of housing sector strength and mortgage credit demand by tracking new housing construction starts. It usually does not affect rates unless the results vary greatly from forecasts. Current forecasts are calling for a decline in starts of new housing. That would be favorable news for the bond market and mortgage rates because it would point towards economic weakness. A weak housing sector makes broader economic growth less likely in the near future.

The third and final economic report of the day will be January’s Industrial Production data at 9:15 AM ET. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.4% increase in production from December to January. A decline in output would be good news and should push bond prices higher, lowering mortgage rates tomorrow, assuming the PPI the doesn’t reveal any surprises.

Tomorrow also brings us the release of the FOMC minutes. Traders will be looking for any indication of the Fed’s next move regarding monetary policy, particularly discussion about their first bump to key short-term interest rates. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility in the markets, or they may be a non-factor. However, they do carry the potential to influence mortgage rates so they should be watched.