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Lake Tahoe Mortgage Rate Trends- March 5, 2015

Thursday’s bond market has opened has opened in positive territory following some favorable economic news. The stock markets are following suit with the Dow up 55 points and the Nasdaq up 23 points. The bond market is currently up 3/32 (2.10%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

Yesterday afternoon’s release of the Fed Beige Book didn’t reveal anything too surprising. All but one of the Fed districts reported stronger overall economic activity despite the winter storms. The report also indicated that inflation remained subdued. We did see some afternoon strength in bonds yesterday after morning pricing was issued, but it was not due to this report. The lack of a significant surprise in this release prevented a reaction to it in the mortgage market.

The first of this morning’s three reports was the revised Productivity index for the 4th Quarter at 8:30 AM ET. It showed a 2.2% decline in worker output that was softer than the initial estimate of down 1.8% but was slightly better than the -2.3% that was expected. This was a very minor variance in a low importance report, so it has had no impact on today’s mortgage rates.

Last week’s unemployment figures were also posted early this morning, revealing that 320,000 new claims for unemployment benefits were field last week. This was an increase from the previous week’s 313,000 and higher than the 295,000 that was forecasted. That indicates the employment sector was a little softer than many had thought last week, making the data favorable for bonds and mortgage rates. Unfortunately, this is only a weekly snapshot, so today’s rates have had only a slight reaction to the news.

January’s Factory Orders was the day’s last report, coming at 10:00 AM ET. The Commerce Department announced that new orders at U.S. factories slipped 0.2% when analysts were expecting to see a 0.6% rise. This is a sign that the manufacturing sector was weaker than predicted, so we can consider this slightly good news for the bond and mortgage markets also.

Tomorrow morning brings us the release of the almighty monthly Employment report. The Labor Department will release February’s Employment report at 8:30 AM ET tomorrow. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller increase in payrolls than expected and little or no increase in earnings. Current forecasts are calling for a 0.1% decline in the unemployment rate of 5.7% and approximately 240,000 new jobs added to the economy. Stronger than expected readings will likely fuel a stock market rally and selling in bonds that would cause a sizable upward revision to mortgage rates. On the other hand, disappointing numbers would raise concerns about the economy’s ability to continue to grow that would have an opposite impact on the markets and mortgage pricing.

Lake Tahoe Mortgage Rate Trends- March 4, 2015

Wednesday’s bond market has opened down slightly despite sizable losses in stocks. The stock markets are in selling mode this morning with the Dow down 157 points and the Nasdaq down 36 points. The bond market is currently up 2/32 (2.11%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

This morning’s relevant economic data was the monthly ADP Employment report at 8:15 AM ET. It revealed an increase of 212,000 private-sector payrolls that fell short of the 220,000 that was expected. This wasn’t a huge variance from forecasts, but the weaker number is considered good news for bonds and mortgage rates. Unfortunately, an upward revision of 37,000 to January’s number offset any positive reaction in bonds that we could have expected. The bottom line is that this data had little impact on this morning’s mortgage rates.

We have something to look for later this afternoon also. The Fed Beige Book will be posted at 2:00 PM ET today. This report, which is named simply after the color of its cover, details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading following its release. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.

Tomorrow has three reports scheduled for release, but none of them are considered to be highly important. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a decline of 1.8% in worker output. Analysts are expecting to see a downward revision of 0.5% to last month’s initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. However, since this data is quite aged now, it likely will have little impact on tomorrow’s mortgage rates unless it shows a significant change.

Last week’s unemployment figures will also be posted at 8:30 AM ET tomorrow. They are expected to show that 295,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s 313,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates.

The final report of the day is January’s Factory Orders at 10:00 AM ET, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for an increase in new orders of approximately 0.6%. A smaller than expected increase would be good news for the bond market and could lead to an improvement in mortgage rates since it would point towards economic weakness.

Lake Tahoe Mortgage Rate Trends- March 3, 2015

Tuesday’s bond market has opened in negative territory despite early weakness in stocks and no relevant economic data set for release. The major stock indexes are showing noticeable losses with the Dow down 87 points and the Nasdaq down 34 points. The bond market is currently down 4/32 (2.10%), which with yesterday afternoon’s weakness should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

There is nothing scheduled for today that is expected to drive bond trading or mortgage rates. It is the only day of the week with nothing set that we need to watch. On days like this, we normally turn towards stocks as the likely force behind bond direction. However, with stocks well in negative ground and bonds following suit, it looks like it is going to be a lost day altogether. If stocks do recover their morning losses, it is difficult to expect bonds to rally with them. So, we will write the day off and turn our attention to tomorrow’s activities.

Payroll processor ADP will announce their February change in private-sector payrolls processed at 8:15 AM ET tomorrow. Since it is not a government agency report, it isn’t considered to be highly important however, as with any employment-related data it does draw some attention. This is especially true for this report because it is posted just a couple days before monthly employment figures are released by the Labor Department (Friday). I personally believe it is given more attention than it really deserves, particularly because many use it to predict the monthly government figures but often fail miserably. Still, if it shows a noticeable variance from expectations, it will likely cause movement in the markets and mortgage rates. Analysts are expecting to see 220,000 jobs added. The lower the number, the better the news it is for bonds and mortgage rates.

The Fed Beige Book will be posted tomorrow afternoon. This report, which is named simply after the color of its cover, details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction following its 2:00 PM ET release. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.

Also worth noting are several speaking engagements from current Fed members. The markets always watch their words for any hint at the Fed’s next move, but unless we get a major surprise I don’t see any of them significantly affecting tomorrow’s mortgage rates.

Lake Tahoe Mortgage Rate Trends- March 2, 2015

Monday’s bond market has opened in negative territory even though both of this morning’s economic reports gave us fairly favorable news. The stock markets are likely a big contributor to this morning’s bond losses with the Dow up 114 points and the Nasdaq up 31 points. The bond market is currently down 15/32 (2.04%), but strength late Friday should limit this morning’s increase in mortgage rates to approximately .125 of a discount point. That is assuming your lender did not improve pricing late Friday.

January’s Personal Income and Outlays data kicked off this week’s calendar at 8:30 AM ET this morning. It showed that personal spending rose 0.3% during the month while spending slipped 0.2%. Both readings were slightly weaker than forecasts were calling for, indicating that consumers had less money to spend and actually spent less than many had thought. That makes the data slightly positive for the bond and mortgage markets.

The Institute for Supply Management (ISM) gave us their manufacturing index for February late at 10:00 AM ET. It came in at 52.8, falling a little short of the 53.0 that was expected. This means fewer surveyed trade executives felt business improved than what was predicted. That is also favorable news for bonds although a reading above 50.0 is a sign of manufacturing sector strength. Therefore, we can consider the news neutral-to-slightly favorable for rates.

Tomorrow has nothing of importance scheduled for release. It is the only day of the week with nothing set to be posted. But the rest of the week has plenty scheduled that is likely to affect mortgage rates. Friday is the most important day of the week due to the significance of the monthly Employment report that is scheduled. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing soon.

Lake Tahoe Mortgage Rate Trends- March 1, 2015

This week has seven relevant reports for the markets to digest with two being considered highly important. The rest of the reports are moderate to fairly important to the markets, meaning they have the potential to affect mortgage rates but usually don’t cause a noticeable change. The most important data comes early and late in the week, but sizable moves in stocks can impact bond trading and mortgage rates any day.

January’s Personal Income and Outlays data will start the week’s activities at 8:30 AM ET tomorrow morning. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to slip 0.1%. Lower levels of income means consumers have less money to spend. And weaker levels of consumer spending helps limit overall economic growth, making long-term securities such as mortgage-related bonds more attractive to investors. Therefore, the weaker the readings, the better the news it would be for mortgage rates.

The Institute for Supply Management (ISM) will release their manufacturing index for February late tomorrow morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a small decline from January’s 53.5 to 53.0 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning growth is likely in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally. This is especially true if we see a reading below 50.0 that would point towards manufacturing sector contraction. But, a much higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise tomorrow morning. One of the reasons this data is considered so important is the fact that it is usually the first monthly report posted that covers the preceding month. It is traditionally posted the first business day of the month, allowing for a current snapshot of conditions in the manufacturing sector.

This week has a couple of private sector employment-related reports due to be posted. The biggest one comes Wednesday morning from payroll processor ADP who will announce their change in private-sector payrolls processed last month. Since it is not a government agency report, it isn’t considered to be highly important however, as with any employment-related data it does draw some attention. This is especially true for this report because it is posted just a couple days before monthly employment figures are released by the Labor Department. I personally believe it is given more attention than it really deserves, particularly because many use it to predict the monthly government figures but often fail miserably. Still, if it shows a noticeable variance from expectations, it will likely cause movement in the markets and mortgage rates.

The Fed Beige Book is the next report scheduled for release and it will be posted Wednesday afternoon. This report details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading Wednesday. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.

Thursday has two reports scheduled for release, but neither is considered to be highly important. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a decline of 1.8% in worker output. Analysts are expecting to see a downward revision of 0.5% to last month’s initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. However, since this data is quite aged now, it likely will have little impact on Thursday’s mortgage rates unless it shows a significant change.

The second report of the day is January’s Factory Orders at 10:00 AM ET, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for an increase in new orders of approximately 0.7%. A smaller than expected increase would be good news for the bond market and could lead to an improvement in mortgage rates since it would point towards economic weakness.

The biggest news of the week comes early Friday morning when one of the single most important monthly reports we see will be posted. The Labor Department will release February’s Employment report at 8:30 AM ET Friday. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller increase in payrolls than expected and little or no increase in earnings. Current forecasts are calling for a 0.1% decline in the unemployment rate of 5.7% and approximately 240,000 new jobs added to the economy. Stronger than expected readings will likely fuel a stock market rally and selling in bonds that would cause a sizable upward revision to mortgage rates. On the other hand, disappointing numbers would raise concerns about the economy’s ability to continue to grow that would have an opposite impact on the markets and mortgage pricing.

Overall, look for a fairly active week in the markets and mortgage rates, especially the early and latter days. Friday is the most important day of the week due to the significance of that day’s data but we could also see a noticeable move in rates tomorrow. The lightest day will probably be Tuesday unless something unexpected happens. With data or relevant reports being posted four of five days and some of that data considered key, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing soon.

Lake Tahoe Mortgage Rate Trends- February 27, 2015

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

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

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

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

Lake Tahoe Mortgage Rate Trends- February 26, 2015

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

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

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

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

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

Tomorrow closes the week with two relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts’ forecasts currently call for an annual rate of growth of 2.1%, down from the initial estimate of 2.6% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will be released just before 10:00 AM ET tomorrow. Current forecasts show this index rising slightly from its preliminary estimate of 93.6. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but is not considered to be a major market mover. This means it will probably not have a significant impact on mortgage rates, especially with GDP revision being released tomorrow.

Lake Tahoe Mortgage Rate Trends- February 25, 2015

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

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

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

We also have the first of this week’s two relatively important Treasury auctions taking place today. 5-year Treasury Notes are being sold today and 7-year Notes will go tomorrow. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon hours.

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

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

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

Lake Tahoe Mortgage Rate Trends- February 24, 2015

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

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

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

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

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

Also tomorrow is the first of this week’s two relatively important Treasury auctions that may influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes tomorrow and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

Lake Tahoe Mortgage Rate Trends- February 22, 2015

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

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

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

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

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

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

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

Friday has the remaining two relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET Friday morning. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts’ forecasts currently call for an annual rate of growth of 2.1%, down from the initial estimate of 2.6% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing Friday.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will close out the week’s calendar just before 10:00 AM ET Friday. Current forecasts show this index rising slightly from its preliminary estimate of 93.6. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but is not considered to be a major market mover. This means it will probably not have a significant impact on mortgage rates, especially with GDP revision being released Friday morning.

In addition to this week’s economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

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