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Lake Tahoe Mortgage Rate Trends- April 30, 2015

Thursday’s bond market has opened in negative territory following mixed economic data, even though stocks are in selling mode during early trading. The major stock indexes are showing sizable losses with the Dow down 115 points and the Nasdaq down 39 points. The bond market is currently down 12/32 (2.08%), but due to strength late yesterday afternoon we may not see much of a change in this morning’s mortgage rates if comparing to Wednesday’s morning pricing.

There were three pieces of data posted early this morning, none of which are considered to be key or highly important. The first was last week’s unemployment update that showed 262,000 new claims for unemployment benefits were filed last week. This was a large decline from the previous week’s revised 296,000 initial claims, indicating the employment sector strengthened last week. That makes the data bad news for bonds and mortgage rates. It is worth noting that because this is only a weekly snapshot of the sector, it usually does not influence mortgage rates. Unfortunately, this was enough of a variance from forecasts to have a negative impact on bond trading and this morning’s mortgage pricing.

The second release of the morning was March’s Personal Income and Outlays data, giving us a measurement of consumer ability to spend and current spending levels. The report revealed no change in income and a 0.4% rise in spending. Both readings were weaker than what analysts were expecting, so we can consider them good news for bonds and mortgage rates. However, traders don’t seem to be too impressed with the news because this was the most important of the three reports and we are still showing bonds losses.

We also got the 1st Quarter Employment Cost Index (ECI) this morning. It showed a 0.7% increase, slightly exceeding expectations of a 0.6% rise. Since it tracks employer costs for worker wages and benefits that helps us measure wage inflation, the stronger reading makes the data slightly unfavorable for the bond and mortgage market.

The week closes tomorrow with two more reports, with one being considered a key piece of data for bonds and mortgage rates. The University of Michigan will update their Index of Consumer Sentiment for April just before 10:00 AM ET tomorrow. This report gives us an indication of consumer sentiment and their willingness to spend. Current forecasts are calling for little change from the preliminary reading of 95.9. This means that surveyed consumers were just as optimistic about their own financial situations as they were earlier this month. This data is relevant because if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future, fueling economic growth. I don’t expect this report to have a significant impact on bonds and mortgage pricing unless it shows a noticeable revision due to the importance of the day’s second release.

The Institute for Supply Management (ISM) will post their manufacturing index for April late tomorrow morning in the second highly important report of the week. This is usually the first important economic report released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing sector growth and could hurt bond prices, pushing mortgage rates higher. Analysts are expecting to see a reading of 51.9, up from March’s 51.5. Ideally, bond traders would like to see a reading below 50.0 as it would hint at contraction in the manufacturing sector rather than growth, but a decline from March’s level would still be good news for mortgage shoppers.

Lake Tahoe Mortgage Rate Trends- April 29, 2015

WEDNESDAY AFTERNOON UPDATE :
This week’s FOMC meeting has adjourned with no adjustment to key short-term interest rates, as expected. In the post-meeting statement the Fed acknowledged the economy and labor market are not where they need to be to raise rates. The statement did not rule out a hike at June’s FOMC meeting that many analysts had targeted as the first move, but the softer economic data and inflation readings that are below their preferred levels make it quite possible that the first move won’t come until later in the year.

Overall, there was nothing too significant or surprising in the statement. The major stock indexes aren’t far off from their morning levels with the Dow down 69 points and the Nasdaq down 23 points. The bond market is currently down 11/32 (2.04%), but I would not be surprised to see some lenders improve rates slightly before the end of the day since the markets appear to have been expecting unfavorable news from the FOMC statement.

This morning did have an extremely important economic report released. The preliminary version of the 1st Quarter Gross Domestic Product (GDP) reading was posted at 8:30 AM ET. It showed that the economy grew at an annual rate of 0.2% that was well short of forecasts. Analysts were expecting to see a 1.0% annual rate, meaning that economy was not nearly as strong as many had predicted during the first three months of the year. That is very good news for bonds and mortgage rates. However, it is believed that bad weather and other unexpected factors skewed the reading lower.

Tomorrow has three pieces of data that may influence mortgage rates. With the FOMC meeting behind us now, more weak economic data should have a more predictable impact on bonds and mortgage rates. The first of the three is last week’s unemployment figures at 8:30 AM. They are expected to show that 290,000 new claims for unemployment benefits were field last week, down from the previous week’s 295,000. This data doesn’t usually cause much movement in rates because it is only a weekly snapshot, but it does have the potential if it shows a wide variance from forecasts.

The second is March’s Personal Income and Outlays data also at 8:30 AM ET. It helps us measure consumers’ ability to spend and current spending habits. This information is important to the mortgage market due to the influence that consumer spending-related data has on the financial markets. If a consumer’s income is rising, they have the ability to make additional purchases in the near future, fueling economic growth. This raises inflation concerns and has a negative impact on the bond market and mortgage rates. Current forecasts are calling for a 0.2% increase in the income reading and a 0.5% rise in spending. If we see smaller than expected readings, the bond market should open higher tomorrow morning.

Also early tomorrow is the 1st Quarter Employment Cost Index (ECI). This index tracks employer costs for wages and benefits, giving us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing although I doubt this report will affect mortgage rates. Current forecasts are showing a rise of 0.6%.

Lake Tahoe Mortgage Rate Trends- April 29, 2015

Wednesday’s bond market has opened in negative territory, extending yesterday’s afternoon weakness despite some extremely favorable economic news. The stock markets are reacting negatively to the bond-favorable economic data with the Dow down 75 points and the Nasdaq down 19 points. The bond market is currently down 11/32 (2.04%), which with yesterday’s selling should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

We saw bonds slide late yesterday as investors positioned themselves for today’s events. Yesterday’s 5-year Treasury Note auction wasn’t the cause. The auction actually went well with several indicators we use to gauge investor demand showing a strong level of interest in the securities. That helps us remain optimistic about today’s 7-year Note auction, although there are more important afternoon events scheduled today. Still, a strong demand in the sale is good news for bonds and mortgage rates, even if we likely will see little reaction to the results.

This morning did have an extremely important economic report released. The preliminary version of the 1st Quarter Gross Domestic Product (GDP) reading was posted at 8:30 AM ET. It showed that the economy grew at an annual rate of 0.2% that was well short of forecasts. Analysts were expecting to see a 1.0% annual rate, meaning that economy was not nearly as strong as many had predicted during the first three months of the year. That is very good news for bonds and mortgage rates. However, it is believed that bad weather and other unexpected factors skewed the reading lower. In addition, it appears traders are more focused on this afternoon’s events than this morning’s data, preventing a favorable reaction to the data.

We also the FOMC meeting adjournment to deal with at 2:00 PM ET this afternoon. It will likely yield an announcement of no change to key short-term interest rates, but we may still see some volatility in the markets following the post-meeting statement. If the statement gives any hint about when they expect to make the first increase to key short-term interest rates, we could see another sizable change to mortgage rates during afternoon trading.

We will update this report shortly after the markets have had an opportunity to react to the statement. There is some relevant economic data set for release tomorrow, but it will be addressed in this afternoon’s update.

Lake Tahoe Mortgage Rate Trends- April 28, 2015

Tuesday’s bond market has opened in negative territory despite much weaker than expected economic news and minor stock losses. The Dow is currently down 23 points while the Nasdaq has lost 10 points during early trading. The bond market is currently down 8/32 (1.95%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s only relevant economic data was April’s Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced that their CCI fell to 95.2 this month, coming up well short of analysts’ expectations. Forecasts were calling for an increase, pushing the index upward by almost a point to 102.2. The large decline means that surveyed consumers were much less optimistic about their own financial situations than many had thought. Because falling confidence levels usually translates into weaker consumer spending, we can consider this report very good news for bonds and mortgage rates. Unfortunately, traders appear to be more concerned about tomorrow’s events than today’s news.

We also have a Treasury auction later today that has the potential to affect mortgage rates. 5-year Treasury Notes are being sold today while 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 to mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours.

Tomorrow is going to be an interesting day to say the least. It starts at 8:30 AM ET with the release of the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. I expect this report to cause sizable movement in the financial markets and therefore the mortgage market also. Analysts are expecting it to show that the economy grew at an annual rate of 1.0% during the first three months of this year. That would be a much slower pace than the 2.2% pace of the final quarter of last year. A smaller increase or a decline would be considered good news for mortgage rates. But a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates tomorrow morning.

This week’s FOMC meeting will adjourn at 2:00 PM ET tomorrow afternoon. It will likely yield an announcement of no change to key short-term interest rates, but we may still see some volatility in the markets following the post-meeting statement. If the statement gives any hint about when they expect to make the first increase to key short-term interest rates, we could see another sizable change to mortgage rates during afternoon trading.

Lake Tahoe Mortgage Rate Trends- April 27, 2015

Monday’s bond market has opened in negative territory with stocks starting the week in positive ground. The Dow is currently up 71 points while the Nasdaq has gained 23 points. The bond market is currently down 9/32 (1.94%), but due to strength late Friday we should see little change in this morning’s mortgage rates.

There is nothing of importance scheduled for release today. However, the rest of the week brings us the release of six economic reports that may affect mortgage rates in addition to an FOMC meeting and a couple Treasury auctions. Two of the week’s reports are considered to be extremely important to the financial and mortgage markets and can cause a great deal of volatility. Throw in the FOMC meeting and we have the makings of a highly important week, not only for mortgage rates but also for the broader financial markets.

April’s Consumer Confidence Index (CCI) will kick-off the week’s schedule at 10:00 AM ET tomorrow. This index is considered to be an indicator of future spending by consumers. The Conference Board surveys 5,000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and savings, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation and economic growth to a minimum. On the other hand, a sizable increase could hurt the bond market, pushing mortgage rates higher tomorrow morning. It is expected to show a reading of 102.2, which would be an increase from March’s 101.3 reading. The lower the reading, the better the news it is for mortgage rates.

Tomorrow also has the first of this week’s two Treasury auctions that have the potential to influence mortgage pricing. 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 to mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours.

Overall, I am expecting it to be a pretty active week for the markets and mortgage rates. We have several days that appear likely to be particularly volatile. Wednesday looks to be the best candidate for most important due to the GDP reading and FOMC meeting. The calmest day should be today. If floating an interest rate and closing in the near future, I strongly recommend maintaining contact with your mortgage professional this week.

Lake Tahoe Mortgage Rate Trends- April 26, 2015

This week brings us the release of six economic reports that may affect mortgage rates in addition to an FOMC meeting and a couple Treasury auctions. Two of the week’s reports are considered to be extremely important to the financial and mortgage markets and can cause a great deal of volatility. Throw in the FOMC meeting and we have the makings of a highly important week, not only for mortgage rates but also for the broader financial markets.

There is nothing scheduled for tomorrow that is likely to move rates. April’s Consumer Confidence Index (CCI) will kick-off the week’s schedule at 10:00 AM ET Tuesday. This index is considered to be an indicator of future spending by consumers. The Conference Board surveys 5,000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and savings, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation and economic growth to a minimum. On the other hand, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday. It is expected to show a reading of 102.2, which would be an increase from March’s 101.3 reading. The lower the reading, the better the news it is for mortgage rates.

Next up is the first of this week’s two key pieces of economic data. That would be the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measure of economic growth or contraction. I expect this report to cause sizable movement in the financial markets Wednesday and therefore the mortgage market also. Analysts are expecting it to show that the economy grew at an annual rate of 1.1% during the first three months of this year. That would be a much slower pace than the 2.2% pace of the final quarter of last year. A smaller increase or a decline would be considered good news for mortgage rates. But a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Wednesday morning.

This week’s FOMC meeting will begin Tuesday and adjourn Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the post-meeting statement. If the statement gives any hint of change in their current forecasts on when they expect to adjust key short-term interest rates, we could see a sizable change to mortgage rates Wednesday afternoon.

Thursday has two reports scheduled that are worth watching. The first is March’s Personal Income and Outlays data at 8:30 AM ET. It helps us measure consumers’ ability to spend and current spending habits. This information is important to the mortgage market due to the influence that consumer spending-related data has on the financial markets. If a consumer’s income is rising, they have the ability to make additional purchases in the near future, fueling economic growth. This raises inflation concerns and has a negative impact on the bond market and mortgage rates. Current forecasts are calling for a 0.2% increase in the income reading and a 0.5% rise in spending. If we see smaller than expected readings, the bond market should open higher Thursday morning.

Also early Thursday is the 1st Quarter Employment Cost Index (ECI). This index tracks employer costs for wages and benefits, giving us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing although I doubt this report will affect mortgage rates. Current forecasts are showing a rise of 0.6%.

The week closes with the two more reports, one of which is considered to be a key piece of data for bonds and mortgage rates. The University of Michigan will update their Index of Consumer Sentiment for April just before 10:00 AM ET Friday. This report gives us an indication of consumer sentiment and their willingness to spend. Current forecasts are calling for little change from the preliminary reading of 95.9. This means that surveyed consumers were just as optimistic about their own financial situations as they were earlier this month. This data is relevant because if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future, fueling economic growth. I don’t expect this report to have a significant impact on bonds and mortgage pricing unless it shows a noticeable revision due to the importance of the day’s second release.

The Institute for Supply Management (ISM) will post their manufacturing index for April late Thursday morning in the second highly important report of the week. This is usually the first important economic report released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. Analysts are expecting to see a reading of 52.0, up from March’s 51.5. Ideally, bond traders would like to see a reading below 50.0 as it would hint at contraction in the manufacturing sector rather than growth, but a decline from March’s level would still be good news for mortgage shoppers.

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 Treasury Notes Tuesday 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 to mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours.

Overall, I am expecting it to be a pretty active week for the markets and mortgage rates. We have several days that appear likely to be particularly volatile. Wednesday looks to be the best candidate for most important due to the GDP reading and FOMC meeting. The calmest day could be tomorrow, although I would not be surprised to still see some movement as investors prepare for this week’s activities. If floating an interest rate and closing in the near future, I strongly recommend maintaining contact with your mortgage professional this week.

Lake Tahoe Mortgage Rate Trends- April 24, 2015

Friday’s bond market has opened in positive territory even though today’s only relevant economic data appeared to give us strong results. The major stock indexes are mixed with the Dow down 9 points and the Nasdaq up 32 points. The bond market is currently up 8/32 (1.92%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

The Commerce Department announced early this morning that new Durable Goods Orders rose 4.0% last month, exceeding forecasts of a 0.5% increase. The headline number appears to show manufacturing sector growth that would be bad news for bonds and mortgage rates. However, a secondary reading that excludes orders for more volatile and costly transportation-related products such as new airplanes, actually showed a 0.2% decline when analysts were expecting a 0.4% increase. This means that if the transportation orders are stripped, durable goods demand fell last month. That is an indication of manufacturing sector weakness, making the data slightly favorable for bonds and mortgage rates.

I would not be surprised to see some afternoon movement in bonds as traders prepare for next week’s activities that include an FOMC meeting, possibly leading to an afternoon improvement in rates. I am not necessarily expecting stocks to drive bond trading, although a significant move either direction for stocks certainly can influence bonds. With the benchmark 10-year Treasury Note yield near the upper end of its recent trading range, the risk for higher rates is minimal in my opinion. At least until we get to some of next week’s events.

Next week is packed with important data and events that have the potential to affect mortgage rates. None of it is scheduled for Monday, but there is at least one item set for every other day of the week with some of them considered to be highly important to the financial and mortgage markets. Look for details on those and the rest of next week’s calendar in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- April 23, 2015

Thursday’s bond market has opened in positive territory following weaker than predicted economic data. The stock markets are showing minor losses with the Dow down 15 points and the Nasdaq down 3 points. The bond market is currently up 3/32 (1.97%), but due to weakness late yesterday, we still will likely see a slight increase in this morning’s mortgage rates.

The first of today’s two economic reports was last week’s unemployment numbers that showed 295,000 new claims for benefits were filed. This was slightly higher than the 294,000 from the previous week and above the 288,000 that was expected by many analysts. This indicates that the employment sector was a bit softer than thought, making the data slightly favorable for bonds and mortgage rates.

March’s New Home Sales report was posted late this morning by the Commerce Department. They announced an 11.4% drop in sales of newly constructed homes last month, falling well short of forecasts. This means the new home portion of the housing sector was weaker than expected, making the data good news for mortgage rates. Unfortunately, this is considered to be a low-importance report and has had a minimal impact on this morning’s rates.

Tomorrow brings us the release of the week’s most important report. The day’s only relevant data is March’s Durable Goods Orders at 8:30 AM ET. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts are calling for an increase in new orders of 0.5%. This would be a sign of manufacturing sector strength, but this data can be quite volatile from month-to-month. Therefore, a small variance between forecasts and the actual results will not heavily influence the markets or mortgage rates. A large decline would be considered good news for bonds and mortgage pricing, while a large rise would indicate strength in the sector. A sign of solid manufacturing growth could lead to higher mortgage rates tomorrow.

Lake Tahoe Mortgage Rate Trends- April 22, 2015

Wednesday’s bond market has opened in negative territory following stronger than expected economic data. Despite that news, the major stock indexes are showing early losses with the Dow down 42 points and the Nasdaq down 14 points. The bond market is currently down 12/32 (1.95%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

March’s Existing Homes Sales report was posted at 10:00 AM ET, giving us a measurement of housing sector strength. The National Association of Realtors reported that home resales rose 6.1% last month, exceeding forecasts. This means that the housing sector was stronger than many had thought, making the data negative for bonds and mortgage rates.

Tomorrow has two pieces of data that we will be watching, but neither is considered to be highly important to the markets. The first will be last week’s unemployment figures at 8:30 AM ET. They will help us measure employment sector strength or weakness. Analysts are expecting to see that 228,000 new claims for unemployment benefits were filed last week, down from the previous week’s 294,000 initial claims. Rising claims for benefits indicate a softening employment sector, so the higher the number the better the news it is for bonds and mortgage rates. However, because this is only a weekly report, its impact on rates is usually kept to a minimum unless it shows a significant variance from forecasts.

Also tomorrow but at 10:00 AM ET will be the release of March’s New Home Sales report. This is similar to today’s Existing Home Sales release except tomorrow’s report tracks sales of newly constructed homes. It also gives us an indication of housing sector strength and future mortgage credit demand, however, unless it varies greatly from analysts’ forecasts I am not expecting the data to cause much movement in mortgage rates. Analysts are currently forecasting a decline in sales.

Lake Tahoe Mortgage Rate Trends- April 21, 2015

Tuesday’s bond market has opened in negative territory with stocks mixed and not much to drive bond trading. The Dow is currently down 20 points while the Nasdaq is up 23 points. The bond market is currently down 7/32 (1.91%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

As was the case yesterday, there is nothing of importance set for release today that is expected to affect mortgage rates. That leaves stocks as the biggest influence on bonds. If the major stock indexes remain near current levels, bonds and mortgage rates will likely do the same.

This week’s first piece of relevant economic data is March’s Existing Homes Sales report from the National Association of Realtors at 10:00 AM ET tomorrow. This report gives us an indication of housing sector strength and mortgage credit demand. It is considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes broader economic growth more difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news it is for bonds and mortgage rates.