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Lake Tahoe Mortgage Rate Trends- March 29, 2016

Tuesday’s bond market has opened in positive territory even though this morning’s only relevant economic data gave us stronger than expected results. The stock markets are mixed with the Dow down 32 points and the Nasdaq up 8 points. The bond market is currently up 7/32 (1.85%), but due to another round of afternoon weakness we will likely see little change in this morning’s mortgage rates if comparing to Monday’s early pricing. Today’s early bond strength should erase the upward revision from yesterday afternoon.

Today’s sole piece of relevant data was March’s Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a reading of 96.2, exceeding forecasts of 94.5 and February’s revised reading of 94.0. This means surveyed consumers were more optimistic about their own financial and employment situations than many had thought. Because rising confidence usually translates into stronger levels of consumer spending, we should consider this data negative for mortgage rates. Fortunately though, bond traders don’t seem to be too concerned about the data this morning.

We also have the first of this week’s two Treasury auctions today that may also influence bond trading enough to affect mortgage rates. 5-year Notes are being sold today, followed by 7-year Notes 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. However, strong sales usually make bonds more attractive to investors and bring more funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. Results of today’s auction will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

The ADP Employment report is set for release early tomorrow morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of ADP’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that usually follows a couple days later. Still, because we could see at least a moderate reaction to the results, we will be watching it. Analysts are expecting it to show that 196,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

 

Lake Tahoe Mortgage Rate Trends- March 24, 2016

Thursday’s bond market has opened down slightly despite favorable economic news. The stock markets are showing moderate losses of 60 points in the Dow and 6 points in the Nasdaq. The bond market is currently down 2/32 (1.88%), but due to strength late yesterday, we still may see a slight improvement in this morning’s mortgage rates if comparing to yesterday’s early pricing.

The first of this morning’s two relevant reports was February’s Durable Goods Orders at 8:30 AM ET. The Commerce Department announced a 2.8% decline in new factory orders for big-ticket products that have a life expectancy of 3 or more years. This was very close to the 2.9% decline that was expected. Since this data is known to be volatile from month to month, that difference from expectations had no impact on today’s rates. But a secondary reading that strips out more costly and volatile transportation-related orders such as new airplanes, showed a 1.0% drop when analysts were calling for only a 0.2% decrease. That variance is what allows us to consider the data good news for mortgage rates, even though it is not showing in this morning’s trading.

Also posted early this morning was last week’s unemployment figures. They revealed that 265,000 new claims for unemployment benefits were filed last week. This was a little short of the 268,000 that was predicted, but a downward revision to the previous week’s number of initial claims (from 265k to 259k) means we saw an increase last week. Because this is only a weekly snapshot, many analysts and market participants don’t put too much weight into the figures. You could make an argument that the increase is good news for bonds and mortgage rates, while the other side of the argument is that the number of claims fell short of forecasts so the data is bad news. Either way, we haven’t seen the markets have much of a reaction to the data.

The bond market is set to close at 2:00 PM ET today ahead of tomorrow’s Good Friday holiday. The stock and bond markets will be closed all day tomorrow and will reopen for regular trading Monday. It is common to see some pressure in bonds as investors make moves to protect themselves over the long holiday, so don’t be surprised if bonds weaken as the day progresses.

Despite the markets being closed tomorrow, there is a somewhat relevant piece of data being released. It is the final revision to the 4th Quarter GDP at 8:30 AM ET. This is the second and final revision to January’s preliminary reading of the U.S. Gross Domestic Product, or the sum of all goods and services produced in the U.S. The GDP is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 1.0% last quarter, unchanged from the previous estimate that was released last month. Analysts are now more concerned with next month’s preliminary reading of the 1st quarter than data from three to six months ago. Because the markets are closed, we won’t see a reaction to this report until they reopen next Monday.

 

Lake Tahoe Mortgage Rate Trends-March 23, 2016

Wednesday’s bond market has opened in positive territory with stocks showing minor losses and today’s only data giving us somewhat favorable results. The Dow is currently down 16 points while the Nasdaq has lost 21 points. The bond market is currently up 6/32 (1.92%), but due to noticeable weakness late yesterday we should see an increase in this morning’s mortgage pricing of approximately .125 of a discount point if comparing to Tuesday’s early rates. The amount of the increase you will see depends on how much of an upward revision your lender made intraday yesterday.

The Commerce Department announced late this morning that sales of newly constructed homes rose 2.0% last month. The number of sales was very close to expectations, but an upward change to January’s sales means that February’s increase was a smaller percentage than what was called for. That allows us to consider the data slightly favorable for mortgage rates.

Tomorrow has two pieces of economic data being posted, both at 8:30 AM ET. The more important of the two is February’s Durable Goods Orders. This Commerce Department report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be volatile from month to month but is still considered to be of fairly high importance to the markets. Analysts are expecting it to show a decline in new orders of approximately 2.9%. An increase in orders would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates tomorrow morning. Since these orders are volatile, it will take a wider variance from forecasts for it to move mortgage rates than other data requires.

The second report of the morning will be last week’s unemployment update. It will give us a small snapshot of the employment sector and is expected to show that 268,000 new claims for unemployment benefits were filed last week, up from 265,000 of the previous week. The higher the number of claims, the better the news it is because rising claims hints at a softening labor market. However, since this is only a weekly report, it likely will not have much of an impact on mortgage rates unless it shows a significant variance from forecasts.

 

Lake Tahoe Mortgage Rate Trends-March 22, 2016

Tuesday’s bond market has opened in positive territory, due mostly as a reaction to the terror attacks in Belgium. The stock markets are mixed for the most part with the Dow down 41 points and the Nasdaq up 1 point. The bond market is currently up 9/32 (1.89%), but weakness late yesterday should keep this morning’s mortgage rates at yesterday’s levels.

There is nothing of importance scheduled for release today. We are seeing a minor flight to safety into bonds as the overseas terrorist event has hurt stock prices in many markets. These events tend to push stock prices lower as investors move funds to the safety of bonds. As funds come into bonds, their yields and mortgage rates move lower. Today’s move was not significant, but was enough to affect mortgage rates (erasing a small increase from late yesterday). As long as the major stock indexes remain near their current levels, bonds and mortgage rates will likely follow suit.

Tomorrow’s sole report is February’s New Home Sales figures at 10:00 AM ET. The Commerce Department is expected to announce an increase in sales of newly constructed homes. This report tracks a much smaller percentage of home sales than yesterday’s Existing Home Sales report covered, so it should have less of an influence on the markets and mortgage pricing. A large increase in sales would be negative for the bond market and mortgage pricing because it would point towards economic strength.

 

Lake Tahoe Mortgage Rate Trends- March 21, 2016

Monday’s bond market has opened in negative territory despite favorable housing news. Although, bonds have improved from their pre-release levels. The stock markets are starting the week relatively calm with the Dow down 28 points and the Nasdaq down 1 point. The bond market is currently down 10/32 (1.90%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point is comparing to Friday’s early pricing.

The National Association of Realtors gave us February’s Existing Home Sales data late this morning. It showed a surprising 7.1% drop in home resales last month, falling well short of expectations. The larger than predicted decline in sales indicates weakness in the housing sector. Because a weakening housing sector makes broader economic growth less likely, we can consider this data good news for the bond and mortgage markets.

Tomorrow has nothing of importance scheduled that is likely to influence mortgage rates. The rest of the week brings us only three more pieces of relevant economic data for the markets to digest. Most of the reports can have an impact on mortgage rates if they show surprises, but none of them are considered extremely important or key data.

Overall, I suspect we will see some movement in mortgage rates this week, but I am not expecting an overly volatile several days. The bond market is expected to close early Thursday ahead of the Good Friday holiday. The stock and bond markets will be closed all day Friday and will reopen for regular trading Monday. It is common to see some pressure in bonds as investors make moves to protect themselves over the long holiday, so don’t be surprised if bonds weaken slightly early Thursday afternoon before closing. Therefore, if still floating, please maintain contact with your mortgage professional this week.

 

Lake Tahoe Mortgage Rate Trends- March 20, 2016

This week brings us the release of only four pieces of relevant economic data for the markets to digest. However, there are only three and a half trading days for it to be posted due to the Good Friday holiday. Most of the reports can influence mortgage rates if they show surprises, but none of them are considered extremely important or key data.

The first will come late tomorrow morning when February’s Existing Home Sales report is posted by the National Association of Realtors. It will give us a measurement of housing sector strength and mortgage credit demand. It is expected to reveal a decline in home resales, meaning the housing sector softened last month. Ideally, bond traders would prefer to see a large decline in sales, pointing towards a rapidly weakening housing sector. Bad news would be a sizable increase in sales, indicating that the housing sector is gaining momentum. That could be troublesome for the bond market and mortgage rates because housing strength makes broader economic growth more likely.

Tuesday has nothing of importance scheduled to be posted. Wednesday’s sole report is February’s New Home Sales figures. The Commerce Department is expected to announce an increase in sales of newly constructed homes. This report tracks a much smaller percentage of home sales than Monday’s Existing Home Sales report covered, so it should have a much weaker influence on the markets and mortgage pricing. A large increase in sales would be negative for the bond market and mortgage pricing because it would point towards economic strength.

February’s Durable Goods Orders will be released Thursday at 8:30 AM ET. This Commerce Department report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be volatile from month to month but is still considered to be of fairly high importance to the markets. Analysts are expecting it to show a decline in new orders of approximately 2.9%. An increase in orders would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates Thursday morning. Since these orders are volatile, it will take a wider variance from forecasts for it to move mortgage rates than other data requires.

Friday has the last piece of data this week. The final revision to the 4th Quarter GDP will at 8:30 AM ET. This is the second and final revision to January’s preliminary reading of the U.S. Gross Domestic Product, or the sum of all goods and services produced in the U.S. The GDP is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 1.0% last quarter, unchanged from the previous estimate that was released last month. Analysts are now more concerned with next month’s preliminary reading of the 1st quarter than data from three to six months ago. Because the markets are closed Friday, we won’t see a reaction to this report until they reopen next Monday.

The bond market is expected to close early Thursday ahead of the Good Friday holiday. The stock and bond markets will be closed all day Friday and will reopen for regular trading Monday. It is common to see some pressure in bonds as investors make moves to protect themselves over the long holiday, so don’t be surprised if bonds weaken slightly early Thursday afternoon before closing. The data itself isn’t of much concern but the benchmark 10-year Treasury Note yield closed at 1.87% Friday. Anything above 1.90% is a big concern, in my opinion, as it makes a move about 2.00% likely. Since it slipped below 1.90%, a move downward is more of a possibility than it was the past two weeks. There is potential gains by floating a rate currently. Unfortunately, there is also an elevated risk of a quick upward move in yields and mortgage rates. Therefore, if still floating, please maintain contact with your mortgage professional.

 

Lake Tahoe Mortgage Rate Trends- March 18, 2016

Friday’s bond market has opened up slightly despite early stock strength. The major stock indexes appear ready to close the week with solid gains, pushing the Dow higher by 114 points and the Nasdaq up 11 points. The bond market is currently up 2/32 (1.89%), which should keep this morning’s mortgage rates close to yesterday’s levels.

The University of Michigan’s Index of Consumer Sentiment was this morning’s only relevant economic data. It came just before 10:00 AM ET, showing a reading of 90.0 for March. This was a couple points lower than expectations of 92.2 and was a decline from February’s final reading of 91.7 when analysts were expecting to see an increase. That reading indicates surveyed consumers were less optimistic about their own financial and employment situations than they were last month. Because waning confidence usually means weaker levels of consumer spending that fuels economic growth, we can consider this morning’s data good news for mortgage rates.

Next week brings us a handful of economic reports that may affect mortgage rates but most of them are considered to be only moderately important to the markets. There is data Monday when the National Association of Realtors posts February’s Existing Home Sales figures. It will give a measurement of housing sector strength. However, it isn’t one of the more important reports we see each month and usually causes changes to mortgage pricing if it shows a noticeable variance from forecasts.

Friday of next week is Good Friday, so it will be a holiday-shortened week with the markets closed Friday and an early close in the bond market Thursday. Look for details on all of next week’s relevant events in Sunday evening’s weekly preview.

 

Lake Tahoe Mortgage Rate Trends- March 17, 2016

Thursday’s bond market initially opened well in positive territory but has since given back a good portion of those gains. The stock markets are mixed with the Dow up 64 points and the Nasdaq down 8 points. The bond market is currently up 4/32 (1.90%), which should help improve mortgage rates again. Just how much of an improvement depends on how much a revision your lender made yesterday afternoon. Overall, we should see this morning’s mortgage rates to be approximately .375 of a discount point lower than yesterday’s morning pricing.

The first of this morning’s two minor economic reports was last week’s unemployment figures at 8:30 AM ET. This release showed that 265,000 new claims for unemployment benefits were field last week, up from the revised total of 258,000 of the previous week. This indicates the employment sector weakened last week, making the data favorable for bonds and mortgage rates. However, this is only a weekly snapshot, so its impact on today’s trading has been fairly minimal.

Late this morning, February’s Leading Economic Indicators (LEI) were released. The Conference Board announced a 0.1% increase in the indicators, falling just short of the 0.2% that was expected. The minimal increase indicates that they are predicting modest growth in economic activity over the next several months. The reading is technically good news for bonds, but since it is only a minor release with a small variance from forecasts, it has not affected today’s mortgage rates.

Tomorrow has a single piece of economic data that is likely to influence mortgage pricing. That would be the University of Michigan’s Index of Consumer Sentiment for March just before 10:00 AM ET. This index gives us a measurement of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, then they are more apt to make large purchases in the near future. This helps fuel consumer spending levels and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. Bad news for bonds and mortgage rates would be rapidly rising confidence. It is expected to show a reading of 92.2 which would be an increase from February’s final reading 91.7.

Lake Tahoe Mortgage Rate Trends- March 16, 2016

Wednesday’s bond market has opened in negative territory following stronger than expected economic news. The stock markets are mixed with the Dow up 12 points and the Nasdaq down 21 points. The bond market is currently down 6/32 (1.98%), which with weakness late yesterday should push this morning’s mortgage rates higher by approximately .250 of a discount point.

Starting off today’s busy schedule was February’s Consumer Price Index (CPI) release at 8:30 AM ET. It showed a 0.2% decline in the overall reading and a 0.3% rise in the core data. The overall reading matched forecasts but the more important core reading that excludes volatile food and energy prices was stronger than the 0.1% increase that was forecasted. This means that prices on core products rose more than expected last month. Since that is an inflationary sign and bonds are less valuable during times of strengthening inflation, this is bad news for mortgage rates.

February’s Housing Starts data was also posted early this morning. The Commerce Department said that new home groundbreakings rose 7.2% last month, indicating growth in the sector. That was a larger jump than analysts were expecting to see, so we should also consider this data bad news for mortgage shoppers.

The final relevant economic report of the morning was February’s Industrial Production data at 9:15 AM ET that gave us a bit of good news. This report showed a 0.5% drop in output at U.S. factories, mines and utilities. Forecasts were calling for a 0.3% decline, meaning that industrial activity was weaker than expected. That makes the data good news for the bond and mortgage markets. However, since this is only a moderately important report it has not been able to erase the losses that came from the earlier releases.

Besides that data, we also have today’s adjournment of the two-day FOMC meeting at 2:00 PM to deal with. The general consensus is that Fed Chairman Yellen and company will not raise key short-term interest rates at this meeting, although some market participants feel it is possible. Even if no move is made, we will be closely watching the post-meeting statement for changes in verbiage that could indicate when their next move is likely to take place. Any surprises could heavily influence the markets and mortgage rates later today.

The FOMC meeting is ending a little earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference with Chairman Yellen. The meeting will adjourn at 2:00 PM, which is also when the Fed will update their economic projections. They will be followed by a press conference at 2:30 PM. These events will probably lead to afternoon volatility in the markets and mortgage rates.

Look for an update to this report shortly after the markets have had an opportunity to react to this afternoon’s events.

Lake Tahoe Mortgage Rate Trends- March 15, 2016

Tuesday’s bond market has opened in positive territory following the release of mostly favorable economic news. The stock markets are showing moderate losses with the Dow down 56 points and the Nasdaq down 31 points. The bond market is currently up 8/32 (1.93%), but due to some selling late yesterday we will likely see this morning’s mortgage rates remain close to yesterday’s early pricing.

February’s Retail Sales data was the first of two important economic reports that were released this morning. The Commerce Department announced a 0.1% decline in sales early this morning. That pegged forecasts, as did the 0.2% decline in a secondary reading that excludes more volatile and costly auto transactions. The surprise came in a sizable downward revision to January’s sales that indicated they were 0.6% weaker than previously thought (+0.2% vs -0.4%). January’s activity is somewhat aged at this point but will still be reflected in quarterly reports that will be posted next month. Therefore, we can consider the data slightly good news for bonds and mortgage rates.

The second release of the morning also came at 8:30 AM ET when February’s Producer Price Index (PPI) was posted. It showed a 0.2% decline in the overall reading and no change in the core data. The overall reading matched expectations, but the more important core reading was just short of the 0.1% increase that was expected. This means that inflationary pressures were a little softer at the producer level of the economy last month than some had thought. That makes the report slightly favorable for mortgage rates also.

Tomorrow is going to be a very busy day with three pieces of economic data being released during morning hours and key Fed events taking place in the afternoon. The most important of the morning batch is February’s Consumer Price Index (CPI) at 8:30 AM ET. It is the sister release of today’s PPI but measures inflationary pressures at the very important consumer level of the economy. The CPI is expected to show a 0.2% decrease in the overall index and a 0.1% rise in the more important core data that excludes volatile food and energy prices. As with the PPI, weaker than expected readings will be good news for bonds and mortgage rates tomorrow.

Also early tomorrow morning, February’s Housing Starts data will be released. This report tracks construction starts of new housing. It doesn’t usually cause much movement in mortgage rates and is considered one of the less important reports we see each month. It is expected to show an increase in housing starts, indicating growth in the housing sector. Good news for the bond market and mortgage rates would be a sizable decline in new starts, but unless we see a large variance from forecasts the data likely will not lead to a noticeable move in mortgage pricing.

The third and final morning release will be February’s Industrial Production report at 9:15 AM ET. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.3% decline from January’s level. A larger decline would be considered favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and broader economic growth would be more difficult if manufacturing activity is slipping.

Tomorrow’s Fed events start with the 2:00 PM ET adjournment of the two-day FOMC meeting. The general consensus is that Fed Chairman Yellen and company will not raise key short-term interest rates at this meeting, although some market participants feel it is possible. Even if no move is made, we will be closely watching the post-meeting statement for changes in verbiage that could indicate when their next move is likely to take place. Any surprises could heavily influence the markets and mortgage rates tomorrow afternoon.

The FOMC meeting is ending a little earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference with Chairman Yellen. The meeting will adjourn at 2:00 PM, which is also when the Fed will update their economic projections. They will be followed by a press conference at 2:30 PM. These events will probably lead to afternoon volatility in the markets and mortgage rates tomorrow.