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Lake Tahoe Mortgage Rate Trends- July 30, 2015

Thursday’s bond market has opened relatively flat even though the major economic release gave us somewhat favorable results. Stocks are showing fairly minor losses with the Dow down 50 points and the Nasdaq down 16 points. The bond market is up 1/32 (2.28%), which should keep this morning’s mortgage rates at yesterday’s early levels.

This morning had two pieces of economic data for the markets to digest. The first and more important one was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It showed a 2.3% increase in the GDP from April through June that was a little softer than expectations. The data shows that the economy rebounded from a weak first quarter but at a slower pace than many had thought. Most forecasts were calling for an increase of 2.5% or higher. It appears that the markets weren’t overly impressed or concerned with the news as both stocks and bonds have shown minimal reaction. Still, we can consider the reading slightly favorable for bonds and mortgage rates.

The second report of the morning was last week’s unemployment figures that showed 267,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s 255,000 initial claims but was not as high as the 272,000 that was predicted. The good news is that the data indicates the employment sector weakened slightly last month. The not so good news is that it was still stronger than analysts thought. Therefore, we can consider the data neutral for mortgage rates.

There is a 7-year Treasury Note auction taking place today that may have a small impact on this afternoon’s mortgage rates. If the sale was met with a strong demand from investors, we could see the broader bond market improve enough to lead to a slight downward revision to mortgage rates. However, a weak interest in the securities could lead to a slight increase. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours.

Tomorrow closes the week with two pieces of economic data that are sort of worth watching. The 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits is the first, coming at 8:30 AM ET. This gives 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. Current forecasts are showing a rise of 0.6%.

And July’s University of Michigan Index of Consumer Sentiment just before 10:00 AM ET will wrap up the week’s activities. It will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 93.3, I think the markets will probably shrug off this news.

Lake Tahoe Mortgage Rate Trends- July 29, 2015

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with no change to key short-term interest rates. That was widely expected from market participants. The post-meeting statement didn’t give us any significant surprises. Key points indicated that the labor market continues to improve as does the housing market and that inflation remains below their preferred rate of 2.0% annually.

The statement did little to affect predictions of when the Fed will make their first increase to key rates. Many still believe that it will come at either the next FOMC meeting in mid-September or the late October meeting. The markets aren’t far off from their earlier levels with stocks and bonds showing slight improvement. The Dow is currently up 110 points while the Nasdaq is up 19 points. The bond market is now down only 3/32 (2.27%), which may be enough of a move for some lenders to improve rates by .125 of a discount point from this morning’s pricing. However, I suspect most lenders will wait for tomorrow’s major data before reflecting this change.

Today’s 5-year Treasury Note auction went fairly well with several benchmarks we use to gauge investor demand showing a decent level of interest. That helps us to be optimistic about tomorrow’s 7-year Note auction. Since its results will not be followed by a major event such as today’s FOMC meeting, a strong demand for that sale could lead to a slight afternoon improvement in rates tomorrow.

Tomorrow morning’s major data is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at a 2.5% annual rate during the second quarter, rebounding significantly from the first quarter’s 0.2% decline. A faster rate of growth should hurt bond prices, leading to higher mortgage rates. But a smaller than expected reading will likely fuel a bond market rally and push mortgage pricing lower since it would indicate the economy was not as strong as many had thought.

Also tomorrow morning will be last week’s unemployment figures. They are expected to show that 272,000 new claims for unemployment benefits were filed last week. This would be a good sized increase from the previous week’s 255,000, hinting at employment sector weakness. Since this report will be posted at the same time as the GDP and it is only a weekly snapshot, I would be surprised if it affected tomorrow’s mortgage rates.

Lake Tahoe Mortgage Rate Trends- July 29, 2015

Wednesday’s bond market has opened in negative territory again as investors get antsy about today’s Fed event. The stock markets apparently are not as concerned about it with the Dow up 88 points and the Nasdaq up 11 points. The bond market is currently down 11/32 (2.29%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s only relevant events take place this afternoon and they are not economic reports. The first is the 5-year Treasury Note auction. This sale will not directly impact mortgage pricing, but can influence general bond market sentiment. If sales such as this go poorly, we sometimes see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more 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 look for any reaction to come during early afternoon hours.

Next up is the adjournment of the fifth FOMC meeting of the year that actually began yesterday. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

I am expecting some volatility this afternoon, so we will be updating this report shortly after the markets have had an opportunity to react to the FOMC statement. There is highly important data set for release tomorrow morning (GDP) but it will be addressed in this afternoon’s revision.

Lake Tahoe Mortgage Rate Trends- July 28, 2015

Tuesday’s bond market has opened in negative territory even thought this morning’s only economic news gave us favorable results. The stock markets are mixed with the Dow up 26 points and the Nasdaq down 6 points. The bond market is currently down 13/32 (2.26%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

The Conference Board gave us July’s Consumer Confidence Index (CCI) at 10:00 AM ET this morning. They announced a reading of 90.9 that fell well short of expectations and was a sizable drop from June’s revised 99.8. Analysts were expecting to see a decline from June but forecasts were for a much smaller drop. This means that surveyed consumers were less optimistic about their own financial and employment situations than many had thought. Because waning confidence usually translates into softer consumer spending that drives economic growth, we can consider this data good news for bonds and mortgage rates. Unfortunately, this is only a moderately important report, so its impact on today’s trading and mortgage pricing has been restricted.

Tomorrow has no relevant economic data but does have two afternoon events that may affect mortgage rates. The first is the 5-year Treasury Note auction. This sale will not directly impact mortgage pricing, but can influence general bond market sentiment. If sales such as this go poorly, we sometimes see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more 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 tomorrow, so look for any reaction to come during early afternoon hours.

Next up is the adjournment of the fifth FOMC meeting of the year that began today. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

Lake Tahoe Mortgage Rate Trends- July 27, 2015

Monday’s bond market has opened in positive territory despite stronger than expected economic news. The stock markets are starting the week with sizable losses of 99 points in the Dow and 24 points in the Nasdaq. The bond market is currently up 8/32 (2.23%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

June’s Durable Goods Orders report was posted early this morning by the Commerce Department. They announced a 3.4% increase in new orders for big-ticket items that was a little stronger than the 3.0% increase that was predicted. A secondary reading that excludes more pricey and volatile transportation-related orders such as airplanes showed similar results (+0.8% vs +0.5% forecast). This data indicates that the manufacturing sector was a little stronger than thought last month, making the data slightly negative for bonds and mortgage rates. However, this data is known to be quite volatile, so the variances in this morning’s report were not considered significant and helped to minimize its impact on today’s rates.

The rest of the week brings us the release of four more economic reports that may impact mortgage rates, one of which is considered to be highly influential. In addition to the economic data, there is also another FOMC meeting that certainly has the potential to cause chaos in the markets and a couple of Treasury auctions mid-week. With data or relevant events scheduled every day, there is a strong likelihood of seeing noticeable mortgage rate movement and possible intra-day revisions more than once this week.

Tomorrow’s sole data is July’s Consumer Confidence Index (CCI) from the Conference Board. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop tomorrow morning. Current forecasts are calling for a reading of 100.0 which would be a weaker reading than June’s 101.4 and indicate consumers are a little less comfortable with their finances than they were last month.

Overall, Wednesday is the most important day of the week due to the FOMC meeting results, but Thursday’s GDP posting is highly important to the markets. I suspect we will see a more active week for mortgage rates than we saw last week, so please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- July 26, 2015

This week brings us the release of five economic reports that may impact mortgage rates, one of which is considered to be highly influential. In addition to the economic data, there is also another FOMC meeting that certainly has the potential to cause chaos in the markets and a couple of Treasury auctions mid-week. There is at least one event set for every day, so there is a strong likelihood of seeing noticeable mortgage rate movement and possibly multiple intra-day revisions this week.

The Commerce Department will start the week’s calendar by posting June’s Durable Goods Orders at 8:30 AM ET tomorrow. Current forecasts are currently calling for an increase in new orders of 3.0% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. A much stronger than expected number may lead to higher mortgage rates tomorrow morning because it would point towards economic strength. If it reveals a large decline in new orders, mortgage rates should move lower. It should be noted though that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move the markets or mortgage rates.

Late Tuesday morning the Conference Board will release their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop Tuesday morning. Current forecasts are calling for a reading of 100.0 which would be a weaker reading than June’s 101.4 and indicate consumers are a little less comfortable with their finances than they were last month.

Wednesday has no relevant economic data but does have two afternoon events. The first is the adjournment of the fifth FOMC meeting of the year that begins Tuesday. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

There are two Treasury auctions that are worth watching this week. 5-year Notes will be sold 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. On the other hand, strong sales usually make bonds more attractive to investors, bringing more funds into the bond market. The buying of bonds that follows 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 Wednesday and Thursday.

The key data of the week is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET Thursday. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at a 2.6% annual rate during the second quarter, rebounding significantly from the first quarter’s 0.2% decline. A faster rate of growth should hurt bond prices, leading to higher mortgage rates Thursday. But a smaller than expected reading will likely fuel a bond market rally and push mortgage pricing lower since it would indicate the economy was not as strong as many had thought.

Friday has two moderately important reports scheduled for release. The 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits is the first, coming at 8:30 AM ET. This gives 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. Current forecasts are showing a rise of 0.6%.

Next is July’s University of Michigan Index of Consumer Sentiment just before 10:00 AM ET that will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to the economic recovery and is looked at as bad news for bonds. Friday’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 93.3, I think the markets will probably shrug off this news.

Overall, Wednesday is the most important day of the week due to the FOMC meeting results, but Thursday’s GDP posting is highly important to the markets. Tomorrow’s Durable Goods Orders can also cause some movement in rates though. I suspect we will see a more active week for mortgage rates than we saw last week, so please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- July 24, 2015

Friday’s bond market has opened flat again even though we got favorable results from this morning’s only economic data. Stocks are showing minor losses with the Dow down 32 points and the Nasdaq down 8 points. The bond market is currently down 1/32 (2.27%), but due to strength late yesterday we should still see an improvement in this morning’s mortgage rates of approximately .125 of a discount point if comparing to Thursday’s morning pricing.

June’s New Home Sales data was released late this morning, revealing a 6.7% decline in sales of newly constructed homes. This was well off of forecasts that were calling for a small increase in sales. The decline indicates the new home portion of the housing sector was softer than many had thought, making the data good news for bonds and mortgage rates.

Next week is going to be much more active than this week was. There are more economic reports being posted and the data is considered to be of higher importance than we had this week. In addition to the economic news, there will also be a couple of Treasury auctions and another FOMC meeting for the markets to digest.

Monday does have something scheduled to start the week. June’s Durable Goods Orders report will be posted early Monday morning, giving us an important measurement of manufacturing sector strength. We will address this report and all of next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- July 23, 2015

Thursday’s bond market has opened relatively flat despite stronger than expected results in this morning’s economic reports. The stock markets are mixed with the Dow down 22 points and the Nasdaq up 15 points. The bond market is currently unchanged from yesterday’s close (2.33%), which should keep this morning’s mortgage rates at Wednesday’s levels.

The first of this morning’s two reports showed that 255,000 new claims for unemployment benefits were filed last week. This was well below forecasts of 279,000 initial claims and the lowest number since November 1973, indicating strength in the employment sector. That makes the data bad news for bonds and mortgage rates, but fortunately this is only a weekly snapshot and does not have nearly the impact on the markets that the big monthly Employment report does.

June’s Leading Economic Indicators (LEI) was also released this morning, coming at 10:00 AM ET. It showed an increase of 0.6% that exceeded expectations of a 0.2% rise. Because this index attempts to predict economic activity over the next several months, the increase is not good news for bonds and mortgage shoppers. However, this report also is considered to be of low importance so has not had much of an influence on today’s mortgage pricing.

The week closes tomorrow with another minor piece of data. June’s New Home Sales report will be released at 10:00 AM ET by the Commerce Department. It gives us another measurement of housing sector strength. Analysts are expecting it to show an increase in sales of newly constructed homes, indicating that the new home portion of the housing sector strengthened a little last month. That would be considered negative news for bonds, but since this data tracks only a small percentage of all home sales it usually has little impact on the bond market and mortgage rates unless it varies greatly from forecasts. Yesterday’s Existing Home Sales report covers most of the home sales in the U.S.

Lake Tahoe Mortgage Rate Trends- July 22, 2015

Wednesday’s bond market has opened up slightly despite stronger than expected housing news. Stocks may be helping by showing minor losses during early trading. The Dow is currently down 15 points while the Nasdaq has lost 24 points. The bond market is currently up 3/32 (2.32%), which should improve this morning’s mortgage rates by approximately .125 of a discount point. That improvement is mostly a result of strength in bonds during afternoon trading yesterday.

The National Association of Realtors gave us today’s only relevant economic data at 10:00 AM ET. They announced that home resales rose 3.2% last month, exceeding forecasts. The report also showed an increase in average sales price and a lower percentage of distressed sales than in May. These indicate housing sector strength, making the data negative for the bond market and mortgage rates. Fortunately, this is only a moderately important report and has had a minimal impact on today’s mortgage rates.

Tomorrow has two minor pieces of economic data for the markets to digest. The first will be at 8:30 AM when we will get last week’s unemployment figures. They are expected to show that 279,000 new claims for benefits were filed last week, down slightly from the previous week’s 281,000 initial claims. Rising claims are an indication of a softening employment sector, so the higher the number of new claims the better the news it is for mortgage rates.

June’s Leading Economic Indicators (LEI) will be posted at 10:00 AM ET tomorrow. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.2% increase, meaning it is predicting minor gains in economic growth over the next few months. A large decline in the index would be good news for the bond and mortgage markets.

Lake Tahoe Mortgage Rate Trends- July 21, 2015

Tuesday’s bond market has opened flat with nothing of importance scheduled for today. The major stock indexes are mixed with the Dow down 124 points and the Nasdaq up 8 points. The bond market is currently up 1/32, which should keep this morning’s mortgage rates at yesterday’s levels.

Stocks are reacting to disappointing earnings news from some big-named companies including IBM and United Technologies that are part of the Dow. This by theory should help boost bond prices but we have not seen much of a reaction yet. If the Dow extends its early losses and the Nasdaq gives back its morning gains, we could see bonds react positively later today.

Tomorrow has the week’s first piece of relevant economic data with the release of June’s Existing Home Sales figures. The National Association of Realtors will post this report at 10:00 AM ET tomorrow. This report gives us a measurement of housing sector strength and mortgage credit demand. Current forecasts are calling for a small increase in sales from May’s totals. A drop in sales would be considered good news for bonds and mortgage rates because a weakening housing sector makes broader economic growth more difficult. However, unless this data varies greatly from forecasts it probably will lead to only a minor change in mortgage rates.