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Lake Tahoe Mortgage Rate Trends- December 19, 2014

Friday’s bond market has opened in positive territory as stocks take a breather from their massive two-day rally that pushed the Dow up almost 700 points. The major stock indexes are showing minor gains during early trading with the Dow up 38 points and the Nasdaq up 18 points. The bond market is currently up 4/32 (2.19%), but due to slight weakness in trading late yesterday, I don’t believe we will see an improvement in this morning’s mortgage rates.

There is nothing of importance scheduled for release today. If we see an intraday change in mortgage rates, it will likely be a result of a noticeable move in stocks. Stock strength generally leads to bond weakness and higher mortgage rates. If the major indexes fall further into negative ground, we may see mortgage rates improve slightly later today.

Next week has a large handful of economic reports scheduled for release that may influence mortgage rates. Most of them are set to be posted one particular day (Tuesday). There is data being released Monday also (November’s Existing Home Sales), but it is not known to be a market-moving piece of data.

It is worth noting that next week is a holiday-shortened week that could bring some additional volatility. The markets will officially be closed for Christmas and will close early the day before. But many traders will be home Friday also, leaving skeleton crews in the office. This means most trading will be done over two days and since it follows such an active week we had this week, I would not be surprised to see more volatility. Look for details on next week’s calendar and scheduled releases in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- December 18, 2014

Thursday’s bond market has opened well in negative ground as yesterday’s afternoon weakness continues into this morning’s trading. A good portion of this morning’s bond selling is a result of stocks staging another rally during early trading. The Dow is currently up 255 points while the Nasdaq has gained 66 points. The bond market is currently down 20/32 (2.20%), which should mean another .125 of a discount point increase in this morning’s mortgage rates. Combined with yesterday’s post-FOMC weakness, we should see rates approximately .250 – .375 of a discount higher than yesterday’s morning pricing.

Both of this morning’s economic reports gave us unfavorable results, but neither was considered important enough to cause this morning’s bond selling. I believe today’s weak open is a result of last week’s flight-to-safety buying unwinding. This was mentioned as a concern last week and was a cause for concern for rates. As stocks rebound from the sell-off, those same funds that moved into bonds as stocks were falling now move out of bonds and back into stocks. The end result is higher bond yields and rising mortgage rates.

The first of today’s reports was last week’s unemployment numbers at 8:30 AM ET. They showed that 289,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised total of 295,000 initial claims. Since this indicates the employment sector improved a little last week, we should consider this negative news for the bond and mortgage markets.

Also posted this morning was November’s Leading Economic Indicators (LEI). The Conference Board announced late this morning that their LEI rose 0.6% for last month, slightly exceeding forecasts of a 0.5% rise. Because this points towards stronger economic growth over the next several months, it is also slightly unfavorable news for mortgage rates.

Tomorrow has nothing of relevance scheduled for release, so we can expect stocks to be the biggest influence on mortgage rates again. If stocks continue to rise, we should see bonds move lower and mortgage rates increase again. I don’t believe we will see bond yields move higher as quickly as we have the past two days, but it is still highly recommended to keep an eye on the markets if still floating a rate because that could change at anytime.

Lake Tahoe Mortgage Rate Trends- December 17, 2014

This week’s FOMC meeting has adjourned with no change to key short-term interest rates. This was widely expected and had no impact on this afternoon’s trading. The verbiage in the post-meeting statement changed a little from the last meeting, which was expected by some market participants. The change came where previous statements read they would keep short-term rates at current levels for a “considerable time” now says they will be “patient” towards rates. That was taken as an indication that the first rate increase will come sooner than later.

The Fed’s economic projections did not vary too much from their previous update with the range of overall economic growth unchanged. Their estimates for the unemployment rate for the end of next year was lowered slightly, meaning they are expecting strength in the employment sector. The bit of good news for bonds came in the inflation estimates that pointed towards inflation falling short of the Fed’s goals.

The markets were back and forth following these 2:00 PM ET announcements. The solid move upward for stocks and the downward turn in bonds came during the press conference with Fed Chair Janet Yellen. The most important remark from her appears to be where she narrowed down the range of when the Fed would start raising rates. She said it wasn’t expected to happen until after a “couple of meetings” next year. Then she followed that with “I believe the dictionary says a couple means two”. Since the FOMC group meets near the end of January and again in mid-March, her comments make it sound as if the first rate hike could come during late spring or early summer.

Overall, it appears this afternoon’s events were taken as negative for bonds and mortgage rates. The major stock indexes are rallying hard with the Dow up 262 points and the Nasdaq up 89 points. The bond market is currently down 22/32 (2.13%), which is enough of a move for many lenders to revise rates higher by approximately .125 – .250 of a discount point from this morning’s pricing.

November’s Consumer Price Index (CPI) was posted at 8:30 AM ET this morning. It showed a 0.3% drop in the overall reading and a 0.1% increase in the more important core data that excludes volatile food and energy prices. The overall reading was weaker than expected while the core reading pegged forecasts. They both indicate inflation remains subdued at the consumer level of the economy, so we can consider the data slightly positive for bonds and mortgage rates.

Tomorrow has two pieces of economic data scheduled for release, but neither is considered to be highly important. The first is last week’s unemployment numbers at 8:30 AM ET. They are expected to show that 292,000 new claims for unemployment benefits were filed last week, down slightly from the previous week’s 294,000 initial claims. Rising initial claims indicates employment sector weakness, so the higher the number the better the news it is for bonds and mortgage rates. Although it is worth noting that because this is only a weekly snapshot, it usually does not cause much movement in mortgage pricing unless it shows a significant variance from forecasts.

At 10:00 AM ET tomorrow morning, the Conference Board will release their Leading Economic Indicators (LEI) for the month of November. This release attempts to measure or predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that it is predicting economic growth over the next several months. This probably will not have much influence on bond prices or affect mortgage rates unless it shows a much stronger reading than forecasts. The weaker the reading, the better the news it is for bonds and mortgage pricing.

Lake Tahoe Mortgage Rate Trends- December 17, 2014

Wednesday’s bond market has opened in negative territory as investors prepare for today’s Fed events. The stock markets are starting the day in positive territory with the Dow up 66 points and the Nasdaq up 20 points. The bond market is currently down 6/32 (2.08%), but we should still see a slight improvement in this morning’s mortgage rates if comparing to Tuesday’s early pricing due to strength yesterday afternoon.

November’s Consumer Price Index (CPI) was posted at 8:30 AM ET this morning. It showed a 0.3% drop in the overall reading and a 0.1% increase in the more important core data that excludes volatile food and energy prices. The overall reading was weaker than expected while the core reading pegged forecasts. They both indicate inflation remains subdued at the consumer level of the economy, so we can consider the data slightly positive for bonds and mortgage rates.

Today’s mortgage-relevant activities did not end with this morning’s CPI release. We also have a couple of Fed events this afternoon that are likely to cause a significant amount of volatility in the markets and possibly mortgage rates. The two-day FOMC meeting adjourns at 2:00 PM ET, which will be followed by a post-meeting statement. That is also when we will get the Fed’s revised economic forecasts on major indicators such as the unemployment rate and key inflation readings. And that will be followed by a 2:30 PM ET press conference hosted be Fed Chair Janet Yellen.

It is widely expected that Ms. Yellen and company will not change key short-term interest rates at this meeting, but traders and analysts are anxious to get the Fed’s current economic forecasts and any indication of when they will make their first increase to key short-term rates. Any surprises in the post-meeting statement language or press conference could lead to a significant rally or sell off in stocks and bonds, causing mortgage rates to move this afternoon also. There is still room for bond and mortgage rate improvement in my opinion, but it seems like traders are expecting extremely favorable news. The problem with having good news built into current pricing is that hearing the favorable news usually has less of a positive impact on rates than not hearing it will have a negative impact. In other words, less to gain with more to risk. Therefore, please proceed cautiously if still floating an interest rate and closing in the immediate future.

We will update this report and address tomorrow’s economic releases shortly after the markets have an opportunity to react to this afternoon’s events.

Lake Tahoe Mortgage Rate Trends- December 16, 2014

Tuesday’s bond market has opened well in positive territory even though there was no major economic data posted this morning. The stock markets are mixed with the Dow up 12 points and the Nasdaq down 18 points. The bond market is currently up 16/32 (2.06%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.

November’s Housing Starts was released at 8:30 AM ET this morning, revealing a 1.6% decline in new home construction starts. Analysts were expecting to see an increase in new starts, but an upward revision to October’s numbers closed the gap between the number of starts expected and what we actually saw. Still, the total number of new groundbreakings in November was lower than analysts were calling for, so we can consider the data favorable for bonds and mortgage rates. Further supporting that is a secondary reading that tracks the number of new permits issued that helps us predict future starts. It showed a much weaker number of new permits than forecasted, indicating that next month’s starts may disappoint also.

Tomorrow is the key day of the week with a highly important measure of consumer inflation and an afternoon full of Fed events. November’s Consumer Price Index (CPI) will be released at 8:30 AM ET tomorrow. It tracks inflationary pressures at the consumer level of the economy. Current forecasts show a decline of 0.1% in the overall reading and an increase of 0.1% in the core data that excludes more volatile food and energy prices. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.

Tomorrow also has some significant FOMC events that are likely to be highly influential on the financial and mortgage markets. The two-day FOMC meeting that began today will adjourn at 2:00 PM ET tomorrow. It is widely expected that Ms. Yellen and company will not change key short-term interest rates at this meeting, but traders and analysts are anxious to get the Fed’s current economic forecasts and any indication of when they will make their first increase to key short-term rates. Also worth noting is that the meeting is ending earlier than the traditional 2:15 PM because it is one that will be followed by a press conference hosted by Fed Chair Yellen. The meeting will adjourn at 2:00 PM ET, forecasts will be posted at 2:00 PM and the press conference will begin at 2:30 PM. It is fairly safe to assume that all of that will lead to afternoon volatility in the markets and mortgage rates tomorrow.

Lake Tahoe Mortgage Rate Trends- December, 15, 2015

Monday’s bond market has opened in negative territory due to stronger than expected economic news. The major stock indexes appeared to be in for a morning of strong gains by pre-market trading strength, but that has quickly fizzled out. The Dow is currently up 16 points while the Nasdaq has gained 2 points. The bond market is currently down 7/32 (2.10%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

This morning’s economic data was November’s Industrial Production report at 9:15 AM ET. It revealed a 1.3% increase in output at U.S. factories, mines and utilities that was the largest monthly rise in production since May 2010. Since analysts were expecting to see only a 0.7% increase, we should consider the data bad news for bonds and mortgage rates. Fortunately though, this is only a moderately important report and most of this morning’s bond selling is a result of stock gains.

The rest of the week has only three monthly economic reports scheduled for release in addition to some key Fed events that could potentially affect mortgage rates. The second report is November’s Housing Starts at 8:30 AM ET tomorrow morning. This data isn’t known to be highly influential on bonds or mortgage pricing, but it does give us an indication of housing sector strength by tracking new home groundbreakings, so it is worth watching. Analysts are expecting to see an increase in new starts, indicating strength in the new home portion of the housing sector. Slowing starts would be favorable for the bond market, although a wide variance is likely needed for the data to cause noticeable movement in the markets or mortgage rates tomorrow.

Overall, Wednesday is the key day of the week due to the release of the Consumer Price Index and the afternoon Fed schedule (FOMC statement, economic forecasts and press conference). The rest of the week’s data and events are considered to be only moderately important, so unless stocks make a major move higher or lower as we are seeing today, we should see only minor changes to rates each day. I believe Friday is the best candidate for calmest day. Despite the lack of a lot of highly important data, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future as the markets can get crazy at any time.

Lake Tahoe Mortgage Rate Trends- December, 15, 2015

This week has only four monthly economic reports scheduled for release in addition to some key Fed events that could potentially affect mortgage rates. There is data set for release four of the five days, but the more important events will take place the middle of the week. We also need to watch stocks for influence on bond trading and mortgage rates following the recent slide in oil that negatively impacted stocks last week. Generally speaking, stock weakness should be good news for the bond and mortgage markets.

The week opens with November’s Industrial Production report mid-morning tomorrow. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.7% increase in output, indicating manufacturing growth. A smaller than expected rise would be good news for bonds, while a stronger reading may result in slightly higher mortgage pricing.

Next up is November’s Housing Starts at 8:30 AM ET Tuesday morning. This data isn’t known to be highly influential on bonds or mortgage pricing, but it does give us an indication of housing sector strength by tracking new home groundbreakings, so it is worth watching. Analysts are expecting to see an increase in new starts, indicating strength in the new home portion of the housing sector. Slowing starts would be favorable for the bond market, although a wide variance is likely needed for the data to cause noticeable movement in the markets or mortgage rates Tuesday.

November’s Consumer Price Index (CPI) will be released at 8:30 AM ET Wednesday. It is similar to last Friday’s Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts show a decline of 0.1% in the overall reading and an increase of 0.1% in the core data that excludes more volatile food and energy prices. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.

Wednesday also has some significant FOMC events that can be highly influential on the financial and mortgage markets. The two-day FOMC meeting that began Tuesday will adjourn at 2:00 PM ET Wednesday. It is widely expected that Ms. Yellen and company will not change key short-term interest rates at this meeting, but traders and analysts are anxious to get the Fed’s current economic forecasts and any indication of when they will make their first increase to key short-term rates. Also worth noting is that the meeting is ending earlier than the traditional 2:15 PM because it is one that will be followed by a press conference hosted by Fed Chair Yellen. The meeting will adjourn at 2:00 PM, forecasts will be posted at 2:00 PM and the press conference will begin at 2:30 PM. It is fairly safe to assume that all of that will lead to afternoon volatility in the markets and mortgage rates Wednesday.

The Conference Board will release their Leading Economic Indicators (LEI) for the month of November late Thursday morning. This release attempts to measure or predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that it is predicting economic growth over the next several months. This probably will not have much influence on bond prices or affect mortgage rates unless it shows a much stronger reading than forecasts. The weaker the reading, the better the news it is for bonds and mortgage pricing.

Overall, Wednesday is the key day of the week due to the CPI and the afternoon Fed schedule. The rest of the week’s data and events are considered to be only moderately important, so unless stocks make a major move higher or lower, we should see only minor changes to rates each day. I believe Friday is the best candidate for calmest day. Despite the lack of a lot of highly important data, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future as the markets can get crazy at any time.

Lake Tahoe Mortgage Rate Trends- December 12, 2014

Friday’s bond market has opened in positive territory following mixed economic news and early stock selling. The major stock indexes are showing sizable losses during early trading with the Dow down 114 points and the Nasdaq down 11 points. The bond market is currently up 12/32 (2.12%), which should improve this morning’s mortgage rates by approximately .250 of a discount point if comparing to Thursday’s early pricing.

Yesterday’s 30-year Bond auction went very well, helping to improve bonds again during afternoon trading, as we saw following Wednesday’s 10-year Note sale. After results were posted at 1:00 PM, the broader bond market reacted favorably and moved into positive ground. That led some lenders to improve mortgage pricing slightly while others may have waited for today’s economic data before reflecting that move.

There were two reports posted this morning that were relevant to mortgage rates. They gave us mixed results but the stock weakness is helping to keep the positive momentum in the bond market. November’s Producer Price Index (PPI) was the first of today’s economic reports. It was posted at 8:30 AM ET, revealing a 0.2% decline in the overall reading and no change in the core data. Both readings were 0.1% below expectations, meaning inflationary pressures at the producer level of the economy were softer than many had thought. That makes the data favorable for bonds and mortgage rates.

December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment was posted just before 10:00 AM ET. It came in at a much stronger than expected 93.8. Analysts were calling for a reading of only 89.5, indicating surveyed consumers were much more optimistic about their own financial and employment situations than expected. By theory, that is bad news for the bond and mortgage markets because rising levels of confidence means consumers are more likely to fuel economic growth by making large purchases in the near future. However, it has not had too much of an impact on this morning’s rates.

Next week has a small handful of economic reports scheduled for release with only one of them considered to be highly important to the markets. Although, in addition to those reports, the last FOMC meeting of the year does take place and it will be followed by revised economic projections and a press conference with Fed Chair Yellen. There is a minor piece of data set for release Monday (Industrial Production), but I am expecting weekend news and stock prices to have the biggest influence on Monday’s mortgage rates. Look for details on next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- December 11, 2014

Thursday’s bond market has opened in negative territory following the release of stronger than expected economic data. The stock markets are rebounding from yesterday’s sell-off with strong gains during early trading. The Dow is currently up 204 points while the Nasdaq has gained 69 points. The bond market is currently down 8/32 (2.20%), but because of strength late yesterday we will likely see little change in this morning’s mortgage rates compared to yesterday’s morning pricing.

We saw strength in bonds late yesterday after news of a decent 10-year Treasury Note auction. Several of the benchmarks we use for determining investor interest in these sales showed a fairly strong level of demand. That helped boost interest in the broader bond market and led to many lenders improving rates slightly during afternoon hours yesterday. The 10-year sale helps us remain optimistic about today’s 30-year Bond auction. Results of today’s sale will be posted at 1:00 PM ET, so any reaction to it should come during early afternoon hours.

There were two pieces of economic data posted early this morning. November’s Retail Sales report was the more important of the two and gave us the results that are pushing bond yields higher today. The Commerce Department announced that retail-level sales rose 0.7% last month, exceeding forecasts of a 0.4% rise. Even a secondary reading that excludes pricey and more volatile auto sales showed an increase that was more than twice expectations. These readings indicate that consumers spent more last month than many had thought. Since consumer spending fuels economic growth, this report was negative for mortgage rates.

Also posted this morning was the weekly unemployment update that revealed 294,000 new claims for unemployment benefits were filed last week. That was close to expectations and a decline from the previous week’s 297,000 new claims. The decline hints at a strengthening employment sector, making the data slightly negative for bonds and mortgage rates. However, the Retail Sales data and stock gains are having much more of an influence on today’s mortgage pricing.

Tomorrow closes the week with two more pieces of relevant economic data. The first will be November’s Producer Price Index (PPI) at 8:30 AM ET tomorrow morning. This index helps us measure inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If tomorrow’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates could fall. Current forecasts are showing a 0.1% decline in the overall index and a 0.1% rise in the core data.

The final report of the week is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET tomorrow morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Tomorrow’s release is expected to show a reading of 89.5, which would be a small rise from last month’s final reading of 88.8. A large decline in confidence would be considered good news for the bond market and mortgage rates.

Lake Tahoe Mortgage Rate Trends- December 10, 2014

Wednesday’s bond market has opened up slightly nut not be enough to offset weakness late yesterday. The stock markets are showing sizable losses with the Dow down 129 points and the Nasdaq down 21 points. The bond market is currently up 4/32 (2.20%), although we still may see a slight increase in this morning’s mortgage rates if comparing to yesterday’s morning pricing. This is a result of stock strength that led to bond weakness during late trading Tuesday.

We have nothing of significance being released this morning. However, we do have the first of this week’s two Treasury auctions that may affect mortgage rates. 10-year Treasury Notes are being auctioned today while 30-year Bonds will be sold tomorrow. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.

Besides the 30-year Bond auction, tomorrow morning brings us the weekly unemployment update and November’s Retail Sales report. The unemployment release is expected to show that 295,000 new claims for unemployment benefits were filed last week. This would be a slight decline from the previous week’s 297,000 initial claims. The larger 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 filings, it usually takes a surprise spike or drop for it to noticeably affect mortgage rates.

November’s Retail Sales report is also scheduled for release at 8:30 AM ET tomorrow. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher tomorrow. Current forecasts are calling for an increase of 0.4% in November’s sales.